New Delhi/Patna: Gold and silver prices registered a sharp decline on Friday, extending losses recorded earlier this month as easing geopolitical tensions, a stronger US dollar and investor profit-booking weighed on demand for precious metals.
According to data released by the India Bullion and Jewellers Association (IBJA), the price of silver fell by Rs9,209 per kilogram to Rs2.31 lakh. A day earlier, the metal had been trading at Rs2.40 lakh per kilogram.
Gold also recorded a significant decline. The price of 24-carat gold dropped by Rs3,152 per 10 grams to Rs1.45 lakh, down from Rs1.48 lakh the previous day.
The latest correction means gold has become cheaper by around Rs11,000 per 10 grams during the first 19 days of June, while silver has fallen by approximately Rs32,000 per kilogram over the same period.
Easing Geopolitical Tensions Reduce Safe-Haven Demand
Market analysts attributed part of the decline to improving geopolitical sentiment following reports of a ceasefire agreement between the United States and Iran.
Gold and silver are traditionally viewed as safe-haven assets during periods of uncertainty and conflict. As fears of a wider conflict in West Asia eased, investors reduced their exposure to precious metals and shifted funds towards riskier assets.
Federal Reserve Signals Higher Interest Rates
Another factor weighing on prices has been the recent stance adopted by the US Federal Reserve.
The central bank has indicated that interest rates could remain elevated for longer and may even see further increases this year rather than the rate cuts previously anticipated by some investors.
Higher interest rates generally reduce the attractiveness of gold and silver because, unlike bonds or savings instruments, precious metals do not generate interest income.
Stronger Dollar Adds Pressure
The US Dollar Index has strengthened in recent sessions following the Federal Reserve’s policy signals.
A stronger dollar typically exerts downward pressure on gold and silver prices in international markets by making dollar-denominated commodities more expensive for buyers using other currencies.
The appreciation of the US currency has therefore contributed to the decline in bullion prices.
Profit-Booking After Record Highs
Analysts also pointed to profit-booking by investors after the sharp rally witnessed in precious metals earlier this year.
Gold and silver had recently touched record highs, prompting institutional investors and traders to lock in gains.
The resulting increase in selling pressure accelerated the decline in prices.
ETF Selling Intensifies Correction
Heavy outflows from exchange-traded funds (ETFs) linked to precious metals further amplified the downturn.
Market data indicated that silver ETFs declined by around 6%, while gold ETFs fell by approximately 3%, reflecting reduced investor appetite for safe-haven assets.
The selling in ETF markets filtered through to domestic bullion prices, contributing to the sharp correction seen on Thursday.
Despite the recent decline, gold and silver remain significantly higher than their levels at the beginning of the year, highlighting the continued volatility in precious metal markets amid shifting global economic and geopolitical conditions.
