New Delhi: Silver prices skyrocketed by 11,000 rupees to reach a record 2.51 lakh rupees per kilogram in the national capital on Wednesday, while gold climbed to 1.56 lakh rupees per 10 grams following a breakthrough two-week ceasefire agreement between the United States and Iran.

The All India Sarafa Association reported that the value of silver surged nearly 5%, rising from Tuesday's close of 2.40 lakh rupees to 2,51,000 rupees per kg, including taxes. Concurrently, gold of 99.9% purity appreciated by 3,200 rupees, or 2.09%, to settle at 1,56,400 rupees per 10 grams, up from the previous session's 1,53,200 rupees.

Geopolitical Relief Fuels Rally

Market analysts attributed the sharp rise in bullion to a global relief rally as geopolitical anxieties in the Middle East began to recede. The cessation of hostilities, brokered just before a midnight deadline set by U.S. President Donald Trump, triggered a shift in investor sentiment toward precious metals as the U.S. dollar and crude oil prices retracted.

"Gold maintained strong gains and approached a three-week high on Wednesday as improved global risk sentiment, along with a pullback in US dollar and crude oil prices, boosted demand for precious metals," said Saumil Gandhi, Senior Analyst of Commodities at HDFC Securities.

The price momentum followed Tehran’s confirmation that safe passage through the Strait of Hormuz would be permitted during the two-week truce, significantly easing global energy supply fears.

International Market Trends

In global trading, spot gold rose by $97.48, or 2.07%, to reach $4,803.33 per ounce. Silver outperformed, trading 6% higher at $77.33 per ounce.

"Spot gold in the international markets surged on Wednesday after the announcement of a temporary ceasefire in the Iran war," noted Praveen Singh, Head of Commodities at Mirae Asset Sharekhan. Singh emphasised that the simultaneous rally in commodities, bonds, and equities was driven by a nearly 20% crash in crude oil prices, which reduced expectations for aggressive interest rate hikes by the U.S. Federal Reserve and other central banks.

Macroeconomic Impact

The dollar index fell below the 99 mark as the ceasefire relieved immediate concerns regarding inflationary shocks caused by energy disruptions. Kaynat Chainwala, AVP of Commodity Research at Kotak Securities, observed that while gold typically acts as a safe haven, it had previously faced downward pressure from liquidity stress as investors sold off bullion to cover losses in other sectors.

However, analysts cautioned that the current market stability remains fragile. "With the ceasefire conditional and compliance around the Strait of Hormuz still uncertain, any signs of a breach or collapse could quickly reverse sentiment and renew downside risk across precious metals," Chainwala said.

With inputs from PTI