Gold, silver prices crash after record rally: Here’s what triggered the sharp sell-off
Rupee plunges 92.2 against US dollar
Prices of silver and gold saw one of their steepest single-day fall in the past few months in futures trade on Friday. The silver futures crashed 17 percent to Rs 3.32 lakh per kilogram, while gold tanked 9 percent to Rs 1.54 lakh per 10 grams, tracking weak trends in the global markets and surging American currency.
Gold futures with April expiry on MCX dropped around 9 percent to hit a low of Rs 1,67,406 per 10 grams. This comes a day after the contracts hit a fresh lifetime high of Rs 1,93,096 per 10 grams. This means that the gold futures fell 13 percent (Rs 25,690 per 10 grams) in just one day.
Silver futures with March expiry, meanwhile, plunged nearly 17 percent to Rs 3,32,002 per kilogram. This marks a fall of nearly 21 percent (Rs 88,046 per kilogram) in just one day after hitting a fresh lifetime high of Rs 4,20,048 per kg.
Today's steep decline in gold and silver prices could be viewed as a usual case of profit-booking following an extended record rally. While high positioning, strong dollar fluctuations, and an upswing in bond yields have led to a correction in gold prices, from a medium- to long-term viewpoint, the prices have continued to find support due to global uncertainty, buying from central banks, and limited supply-demand relations.
Rupee plunges 92.2 against US dollar
The rupee fell to a record low of 92.02 on Friday before closing slightly higher at 91.97 against the US dollar amid a strong American dollar and unpredictable geopolitical developments.
According to forex traders, the investors' morale was negatively impacted by a persistent withdrawal of foreign capital and a decline in domestic equities. During intraday trading, the rupee gained ground against the US dollar, closing at 91.82 after opening at 91.89 at the interbank foreign exchange. The rupee ended the session at 91.97 against the dollar, up barely 2 paise from the previous closing level, after hitting its lowest-ever level of 92.02.
On the Indian equities market, the Nifty plunged 98.25 points, or 0.39%, to 25,320.65, while the Sensex dropped 296.59 points, or 0.36%, to 82,269.78. Exchange data showed that on January 29, the foreign institutional investors sold stocks valued at 393.97 crore.
Economic Survey, which was tabled in parliament on January 29, stated that the rupee is "punching below its weight" and "investor reluctance to commit funds to India warrants examination at a time when inflation is under control, and the growth outlook is favourable.
