Gold prices decline Rs 1,200, silver drops Rs 4,000

Gold and silver have plunged further in Indian markets, with gold prices tumbling by over Rs 5,800 per 10 grams and silver by more than Rs 15,500 per kilogram over the past two sessions, driven by a surging US dollar, hawkish US Federal Reserve signals, and a significant liquidity drain from global equity markets. This sharp downturn, extending to its lowest levels since November for gold and six months for silver, reflects a broad flight to the greenback as investors seek safer havens amidst a volatile financial landscape. The ongoing slump is primarily fueled by the US Dollar Index (DXY) hitting a 13-month high, coupled with growing expectations of tighter monetary policy from the Federal Reserve, potentially including multiple rate hikes this year under new Chair Kevin Warsh, which makes non-yielding precious metals less attractive. Further pressure comes from a broader 'liquidity-driven adjustment' triggered by a major sell-off in AI and semiconductor stocks earlier this week, forcing investors to liquidate gold holdings to cover losses in equities, despite some tech stocks showing a rebound today. Meanwhile, European Central Bank President Christine Lagarde recent comments downplaying the need for a 'forceful policy response' to inflation are also inadvertently bolstering the dollar's strength against the Euro, further impacting global metal prices. Market participants anticipate continued pressure on gold and silver, with any rallies likely to be met with fresh selling until a significant shift occurs in the dollar's trajectory or renewed investment demand emerges. Adding to the complex picture, easing geopolitical tensions surrounding the Strait of Hormuz and progress in US-Iran peace talks have further diminished gold's appeal as a safe-haven asset, suggesting a challenging near-term outlook for precious metals. Investors will be closely watching upcoming US inflation reports and Fed commentary for any signs of a pivot in monetary policy.