Silver and gold prices sharply dropped: silver lost 2.11 lakh rupees from its peak

Those planning to invest in gold and silver or purchase jewelry are advised to wait. On Thursday, which is the fourth working day of the week, there was a sudden and significant change in the prices of precious metals.

Silver, which had been declining for three consecutive days, became more expensive, while the price of gold rose sharply. These changes occurred immediately after the opening of trading on the Multi Commodity Exchange (MCX).

In the futures market, gold showed a strong jump on Thursday. According to MCX Gold Rate data, 10 grams of 24-carat gold, which closed at 145,848 rupees on the previous business day, opened at 147,650 rupees. Thus, gold increased in price by 1,802 rupees in one surge.

It should be noted that at the beginning of this week, there was a downward trend in futures gold prices. On the last business day of last week, Friday, futures gold closed at 151,499 rupees, and during the first three days of the current week, it fell to 145,848 rupees, representing a decrease of 5,651 rupees for 10 grams over three days. However, this downward trend was interrupted on Thursday.

Not only did the price of gold rise, but the futures price of silver also increased on Thursday, although the rate of growth was lower than that of gold. On the previous business day, 1 kilogram of silver with an expiration date of December 4 closed trading on MCX at a price of 208,338 rupees, and upon opening, reached the mark of 209,950 rupees per kilogram.

Despite the increase in futures prices on Thursday, silver is still selling significantly cheaper than its historical high. It is worth mentioning that in the last week of January, the price of silver exceeded the 400,000 rupee mark for the first time, reaching 4,20,048 rupees on the MCX Silver Price. Compared to current prices, it is still cheaper by 210,000 rupees per kilogram.

The trend of falling prices for gold and silver continues. Prices for precious metals, which sharply dropped on Monday, continued to decline on Tuesday.

On the Multi Commodity Exchange (MCX), the price of silver fell by more than 3300 rupees per kilogram, after which silver became cheaper than its historical high by more than 200 thousand rupees. Gold also showed a decrease in value.

The latest quotes for 20-, 22-, and 24-carat gold are being considered on both the futures and domestic markets.

Regarding the futures price of silver, the contract expiring on December 4 closed at 2,22,877 rupees on Monday after daily trading. On Tuesday, after an initial rise, the price suddenly dropped to 2,21,783 rupees, representing a fall of 3319 rupees per kilogram.

Following this drop on MCX, silver became significantly cheaper than its peak level. In January of this year, the MCX Silver Price reached 4,20,048 rupees per kilogram; comparing this with the current price shows that silver is available for 2,00,490 rupees less.

Additionally, changes were observed in gold futures prices on MCX. Although the rate of decline for this yellow metal was not as sharp as that of silver, the gold contract expiring on December 4 closed at 1,49,543 rupees on the previous business day. On Tuesday, the price fell to 1,48,550 rupees, which is a decrease of 993 rupees.

In addition to the futures market, changes also occurred in the domestic market, where precious metals also became cheaper. 24-carat gold decreased from 1,48,061 rupees on Monday to 1,47,617 rupees per 10 grams. As for silver, its price dropped from 2,20,295 rupees per kilogram to 2,19,038 rupees.

According to data updated on the Indian Bullion Jewelers Association (IBJA.Com) website, current prices for various grades of gold can be viewed. However, it should be noted that although IBJA publishes uniform prices across the country, when purchasing jewelry in a store, 3% GST and manufacturing charges must be added, which can vary in different cities, increasing the final cost of the metal.

Following a period of record growth, the price of gold is currently undergoing a significant correction. On the international market, gold has fallen by approximately 27% compared to record levels in January, while the Indian market shows a decline of about 23% from the January peak. Compared to the high on MCX in August, the domestic market has shown a drop of more than 10%.

Buyers are questioning whether prices will continue to fall, especially ahead of holiday and wedding seasons. On MCX, gold futures reached ₹164,773 per 10 grams at the end of August, after which there was a sharp drop, and last week the price fell to ₹145,991, which is about 11% below the August record. Globally, the spot gold price has decreased from a peak of around $4,698 per ounce to approximately $4,130 per ounce.

The recent decline in gold prices is due to several global factors. Initially, prices experienced pressure due to investors taking profits after reaching record highs. Subsequently, concerns related to inflation and interest rates in the US weakened gold's growth. The rise in real yields on US bonds made gold, which does not yield interest, less attractive to investors. Furthermore, the strengthening dollar has put pressure on international gold prices. High inflation levels and the probability of a tight monetary policy in America also influence the value of gold.

Experts suggest that further declines in gold may be possible in the short term, but the level of ₹125,000 per 10 grams is not yet the base scenario. Analysts believe that on the international spot market, gold could fall into the range of $3,950–$4,025 per ounce. When converted to MCX, this could lead to a price between ₹144,500–₹146,200 per 10 grams. Reaching the ₹125,000 mark is only possible with a further increase in the yield on 10-year US bonds and a significant overshoot of US CPI inflation forecasts in October, which is currently considered unlikely.

According to specialists, an important support zone for international gold is $3,930–$4,000 per ounce. If this support is broken, the next support level may be in the range of $3,600–$3,750 per ounce, and the probability of reaching this zone is estimated at about 25%. In that case, gold in the Indian market could approach ₹134,000 per 10 grams. It should be noted that this is not a base forecast, but an assessment of a situation where global gold prices fall below current support.

Experts currently consider a drop in gold to ₹100,000 per 10 grams extremely unlikely. For this level to be reached, the international price would have to fall to approximately $2,800 per ounce. Specialists note that gold is still supported by several structural factors, including the process of de-dollarization, geopolitical tensions, central bank activity, and long-term inflation concerns. Thus, reaching the ₹100,000 level would require a substantial change in current conditions.

The decline in gold prices in India may be somewhat limited compared to global markets. One factor is the dynamics of the Indian rupee, as the domestic price depends on both the dollar exchange rate and the strength or weakness of the rupee. Moreover, the start of the festive and wedding season in India is expected to increase demand for gold, which may curb price declines. Nevertheless, high prices also affect retail jewelry purchases, prompting customers to opt for lighter ornaments.

Current signs indicate the possibility of further gold correction in the short term. Key factors determining the future direction remain the support around $4,000 in the international market and the movement of US bond yields. Experts believe that the current correction may continue in the near term, but it can also be viewed as a consolidation phase within a long-term uptrend. Central bank buying, ETF investments, and geopolitical uncertainty may provide long-term support to gold.

Although a drop to ₹125,000 is possible, it requires the emergence of specific conditions, such as a sharper rise in the yield on 10-year US bonds and a significant overshoot of inflation forecasts in October. Currently, experts assess the probability of this scenario as low. Therefore, the picture of gold prices is ambiguous: there is a risk of further decline in the short term, but the probability of reaching a very low level of ₹100,000 is currently considered extremely low.