Silver prices tumbled below the Rs 2 lakh per kilogram mark for the first time in over 10 months in the national capital on Tuesday, while gold declined by Rs 500, as weakness in global bullion markets and a stronger US dollar weighed on investor sentiment.
According to the All India Sarafa Association, silver plunged Rs 4,000 to Rs 1.98 lakh per kilogram, inclusive of all taxes, marking its lowest level in 10 months. The white metal had closed at Rs 2.02 lakh per kg in the previous trading session.
Silver had last traded around these levels on December 16, when it was quoted at Rs 1,98,500 per kilogram.
Gold of 99.9 per cent purity also depreciated by Rs 500 to Rs 1,45,800 per 10 grams, inclusive of all taxes, against Monday's closing price of Rs 1,46,300 per 10 grams.
Stronger dollar weighs on bullion
Market analysts attributed the decline in domestic precious metal prices to the strengthening US dollar and continued weakness in international bullion markets.
"Gold traded weak in the domestic markets as dollar strength and continued weakness in international precious metal prices kept it under pressure," said Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities.
Trivedi said domestic gold prices were expected to remain volatile in the near term, with a projected trading range of Rs 1.40 lakh to Rs 1.44 lakh per 10 grams.
Global gold hovers near USD 4,000
In overseas markets, spot gold edged marginally lower to USD 4,011.44 per ounce, while silver declined by more than 1 per cent to USD 53.41 per ounce.
Akshat Siddhant, Lead Quant Analyst at investment platform Mudrex, said gold was consolidating around the USD 4,000-per-ounce level after touching a three-month low of USD 3,975.
He noted that easing crude oil prices had provided some relief to the market, although precious metals continued to face selling pressure.
Silver underperforms gold
Gaurav Garg, Head of Research at brokerage platform Lemonn, said silver was underperforming gold, reflecting stronger selling pressure in the international market.
He pointed out that silver had slipped below USD 54 per ounce and was trading near an 11-month low, amid concerns over industrial demand.
The sharper decline in silver prices compared with gold indicated continued weakness in the white metal, which is influenced by both investment demand and industrial consumption.
Investors await US Fed decision
Market participants remained cautious ahead of the US Federal Reserve's monetary policy meeting scheduled for October 28.
Saumil Gandhi, Senior Analyst – Commodities at HDFC Securities, said the central bank's interest rate decision and subsequent guidance from Fed Chair Kevin Warsh were expected to influence the next directional movement in precious metal prices.
The upcoming policy announcement is being closely monitored for indications about the trajectory of US interest rates and the dollar, both of which remain important factors influencing international bullion prices.
With global gold trading near USD 4,000 per ounce and silver facing sustained selling pressure, analysts expect volatility to persist in domestic precious metal markets in the near term.