Gold drops Rs 1,100, silver extends slide as oil surge stokes inflation fears

NEW DELHI: Gold prices declined by Rs 1,100 to Rs 1.58 lakh per 10 grams in the national capital on Monday, tracking losses in global markets amid rising crude oil rates and heightened concerns over inflation.

According to local marketmen, the yellow metal of 99.9 per cent purity dropped Rs 1,100 to Rs 1,58,800 per 10 grams (inclusive of all taxes) from Friday's closing level of Rs 1,59,900 per 10 grams.

Silver also remained under pressure, falling Rs 5,000 to Rs 2,55,700 per kilogram (inclusive of all taxes). The white metal had settled at Rs 2,60,700 per kg in the previous session.

Analysts said the latest drop in precious metals marks a continuation of bullion's recent struggles as investors increasingly focus on the inflationary impact of higher energy prices rather than the metals' traditional safe-haven appeal.

"Gold and silver prices declined on Monday amid rising concerns over inflation and interest rates, driven by stronger-than-expected US economic data, which has diminished the safe-haven appeal of these precious metals," Gaurav Garg, Research Analyst at Lemonn Markets Desk, said.

Additionally, geopolitical tensions in West Asia, particularly recent developments involving Israel, have further fuelled market volatility, impacting investor sentiment, he added.

In the international markets, spot gold fell nearly 1 per cent to USD 4,291.79 per ounce, while silver declined 1.34 per cent to USD 66.93 per ounce.

Meanwhile, crude oil prices advanced by nearly 5 per cent to USD 97.44 per barrel in global markets.

"The sharp drop in gold prices is a reaction to a blowout US jobs report, which signals that interest rates might remain higher for longer, strengthening the dollar and pulling money away from precious metals," Rajkumar Subramanian, Head - Product & Family Office, PL Wealth, said.

Precious metals prices in the near term are likely to remain volatile ahead of upcoming US inflation data and Federal Reserve updates, but gold continues to be a critical long-term hedge against inflation, he added.