Whalesbook
Market Correction Deepens
Domestic precious metal prices recorded significant losses last week. Silver futures on the Multi Commodity Exchange (MCX) dropped by 12.59 percent, settling at ₹2.26 lakh per kilogram. Gold declined by 8.82 percent, closing at ₹1.44 lakh per 10 grams. This sell-off accelerated mid-week.
Central Bank Signals Curb Easing Hopes
The downward pressure intensified after policy signals from major central banks, including the U.S. Federal Reserve, Bank of Japan, Bank of England, and European Central Bank. These institutions raised concerns about rising crude oil prices and inflationary pressures. Such signals suggest that monetary easing might be delayed, hurting demand for safe-haven assets like gold and silver.
Global Declines Mirror Domestic Trends
Precious metals also experienced notable declines in global markets. Silver futures on Comex dropped by 14.36 percent to $69.66 per ounce, while gold futures fell by 9.6 percent to $4,574.9 per ounce over the week. This synchronized movement indicates broad-based selling pressure across international exchanges.
Headwinds to Recovery
Analysts expect gold to trade sideways or dip slightly in the coming weeks. While prices should stabilize after the sharp fall, they could still see sharp intraday moves. The strong U.S. dollar, near 99-100, and high interest rates continue to challenge gold's recovery. The U.S. Federal Reserve's reluctance for early rate cuts, combined with rising energy costs making inflation control difficult, has delayed expectations for monetary easing. This reduces gold's attractiveness as a safe haven.
Underlying Demand Remains Intact
Despite these short-term pressures, global central banks are expected to stick to their long-term gold buying plans, meaning overall demand for the metal remains strong. Geopolitical developments have offered some limited support, with gold still acting as a hedge against downside risks. Additionally, seasonal demand from upcoming weddings and festivals like Akshaya Tritiya could boost domestic prices in the near term.