Why did gold and silver prices plunge today? Key factors behind the bullion selloff

Gold and silver prices witnessed a steep decline on Monday, pressured by aggressive profit-booking, a stronger US dollar and rising real yields amid heightened geopolitical tensions.

On the Multi Commodity Exchange (MCX), gold April futures slipped 6.91 per cent to Rs 1,34,506 per 10 grams in intraday trade around 3:30 pm. Silver prices also came under heavy selling pressure, with May futures dropping 8.84 per cent to Rs 2,06,716 per kg.

Analysts said the sharp selloff erased nearly $2 trillion in market value within a short span, driven largely by investors booking profits after recent highs.

The US dollar strengthened by about 0.45 per cent during the session, with the dollar index rising to 100.10, making bullion more expensive for holders of other currencies. The Indian rupee also weakened, falling 33 paise to hit a fresh all-time low of 93.86 against the US dollar.

In the international market, spot gold prices declined significantly, with Comex gold falling over 2.4 per cent to $4,492 per ounce. Silver also dropped 4.7 per cent to hover just above $67 per ounce.

Earlier in the day, domestic gold futures had plunged more than 10 per cent to around Rs 1.29 lakh per 10 grams before recovering partially.

Market experts attributed the decline to rising crude oil prices, which have fuelled inflation concerns and increased fears of a potential economic slowdown. These factors have reinforced expectations that interest rates may remain higher for longer, pushing up real yields and dampening the appeal of non-yielding assets like gold.

Geopolitical tensions further weighed on sentiment after Donald Trump issued a 48-hour deadline to Iran to ensure full access to the Strait of Hormuz. He warned of severe consequences, including potential strikes on critical infrastructure, if shipping lanes were disrupted.

In response, Iranian authorities warned of retaliatory action targeting energy infrastructure in Gulf countries, while maintaining that the Strait remains open, albeit under heightened security due to wartime conditions.

Despite the volatility, market participants advised investors to avoid panic selling and continue systematic investment plans (SIPs), using corrections as opportunities to accumulate at lower levels.