Why Gold And Silver Prices Crashed On April 28?

Gold and silver prices fell sharply in India on Tuesday as rising crude oil prices and a stronger US dollar hurt global bullion markets. Gold dropped Rs 1,800 to Rs 1.54 lakh per 10 grams in Delhi. Silver plunged Rs 6,500 to Rs 2.44 lakh/kg. Experts said higher inflation worries and expectations of delayed US interest rate cuts pushed prices lower.

Gold and silver prices saw a big fall in the national capital on Tuesday as global bullion markets came under pressure. According to the All India Sarafa Association, gold of 99.9 per cent purity dropped by Rs 1,800 to Rs 1,54,300 per 10 grams, including all taxes. On Monday, it had closed at Rs 1,56,100. Silver also suffered heavy losses. Its price fell by Rs 6,500 to Rs 2,44,000 per kilogram. It had ended the previous session at Rs 2,50,500 per kg.

Why prices fell

Experts said the sharp fall was mainly due to rising crude oil prices and a stronger US dollar. When oil becomes expensive, inflation worries usually rise. This often leads investors to believe that central banks may keep interest rates high for longer.

Higher interest rates usually make gold less attractive, as gold does not pay interest like bonds or savings accounts.

Analysts explain market pressure

Saumil Gandhi, Senior Analyst for Commodities at HDFC Securities, told news agency PTI that gold fell to a three-week low on Tuesday.

He explained that rising energy prices increased inflation concerns. This strengthened expectations that interest rates may stay higher for a longer period.

That has pushed bond yields higher, putting extra pressure on gold prices.

Gandhi also said traders were cutting their positions ahead of important central bank meetings, especially the upcoming US Federal Reserve decision.

Global bullion markets under strain

International prices also fell sharply. Spot gold dropped by USD 95.37, or 2.04 per cent, to USD 4,586.50 per ounce.

Silver slipped by USD 2.33, or 3.09 per cent, to USD 73.18 per ounce.

At one stage, spot gold was trading near USD 4,580 per ounce, down more than 1 per cent.

Trump remarks add to uncertainty

Praveen Singh, Head of Commodities at Mirae Asset ShareKhan, said crude oil and the US dollar gained after reports that US President Donald Trump was unhappy with Iran's latest proposal on nuclear talks.

The proposal reportedly included delaying negotiations.

This increased worries about inflation and reduced hopes that the US Federal Reserve would cut interest rates soon.

A stronger dollar usually makes gold and silver more expensive for foreign buyers, which often lowers demand.

What investors are watching next

Market participants will now closely follow key US economic data.

Important numbers due later in the day include the ADP employment report and the Conference Board's consumer confidence data.

These reports could influence the US Federal Reserve's next move and decide where gold and silver prices head next.

(With inputs from agencies)