Gold Prices Plummet as Crude Oil Surges and Dollar Strengthens
Gold prices dropped by Rs 500 to Rs 1,55,400 per 10 gram in India's national capital on Monday as crude oil prices surged and the US dollar gained strength. This decline comes despite silver bucking the trend and holding steady at Rs 2,34,600 per kilogram.
The global gold price also declined by 1.3% to USD 4,291.71 per ounce, while silver tumbled nearly 3% to USD 62.82 due to investors pricing in a probable Fed rate hike. Higher oil prices have added to inflation worries, putting further pressure on demand for gold and silver.
Akshat Siddhant, Lead Quant Analyst at investment platform Mudrex, attributed the decline to investors factoring in a probable Fed rate hike and higher oil prices contributing to inflation worries. He noted that crude oil surged to USD 103 a barrel after Saudi Arabia shut its East-West pipeline following drone attacks.
Despite this decline, ANZ expects geopolitical developments and elevated energy costs to add to inflation, but also sees persistent geopolitical uncertainty strengthening gold's safe-haven appeal. The bank retained its 12-month gold price target of USD 5,400 an ounce due to recovering gold-backed ETF holdings and speculative positions.