SRINAGAR: Gold prices witnessed a historic collapse on Monday, plunging nearly 5–6 per cent in domestic markets and marking their sharpest monthly decline in over five decades, as a global sell-off and tightening monetary outlook rattled investor sentiment.
In the national capital, gold prices fell by around Rs 9,050 to Rs 1,43,600 per 10 grams from the previous close of Rs 1,52,650, according to market data. On the MCX, gold for April delivery declined about 3 per cent to Rs 1,39,542 per 10 grams, while the June contract slipped 4 per cent to Rs 1,42,263.
Silver prices mirrored the trend, tumbling sharply by Rs 10,500 to Rs 2,30,000 per kg in Delhi markets. On the exchange, silver contracts for May and July dropped around 3 per cent each, trading at Rs 2,20,649 per kg and Rs 2,24,999 per kg, respectively.
In international markets, spot gold fell over 5 per cent to around 4,263 US dollars per ounce, taking its total decline in March to nearly 20 per cent—the steepest one-month fall since 1975. Analysts noted that previous downturns in 1978, 1980, 1983 and even during the 2008 financial crisis were less severe than the current correction.
Market participants attributed the sharp fall to a broad-based global sell-off across asset classes, including equities, cryptocurrencies and real estate. As losses mounted, investors resorted to large-scale liquidation of holdings, including bullion, to meet margin requirements and rebalance portfolios.
Heavy outflows from gold-backed exchange-traded funds (ETFs), coupled with profit booking after recent record highs, further accelerated the decline.
Analysts said the changing stance of the US Federal Reserve has been a key driver behind the downturn. Expectations of rate cuts have diminished, with growing speculation that interest rates may remain elevated or even rise further.
A stronger US dollar, which typically moves inversely to gold, has made the metal more expensive for global buyers, dampening demand. Rising bond yields have also reduced the appeal of non-yielding assets like gold.
Despite ongoing geopolitical tensions, including the continuing conflict involving the US and Iran in West Asia, gold has failed to retain its traditional safe-haven appeal.
Experts said rising energy prices have complicated the inflation outlook, prompting expectations of tighter monetary policy by central banks. This has outweighed the usual positive impact of geopolitical uncertainty on gold.
According to market analysts, MCX gold has declined nearly 28 per cent from its all-time high, while silver has plunged as much as 50 per cent from peak levels, reflecting the intensity of the current correction.
Analysts cautioned that bullion markets are likely to remain highly volatile in the near term amid uncertainty over global interest rates, inflation trajectory and geopolitical developments.
However, some experts believe that the long-term fundamentals of gold remain intact and the current dip could present buying opportunities for investors with a longer investment horizon.
