MCX gold slips below ₹1.6 lakh/10 grams; Silver slides 1% amid surging oil prices as West Asia war continues

At around 11:24 AM, the contract was trading ₹378 or 0.24% lower at ₹1,59,893 per 10 grams in business transactions of 7,838 lots, tracking a fall in its international prices.

In the global market, COMEX yellow metal futures (for April) tumbled as much as 1% to the session’s low of $5,074.60 per ounce. At the time of writing, it stood at $5,107.90 per ounce, down by 0.35%.

On the MCX, silver futures for expiry in May were trading mixed in a volatile session. The contract tanked as much as ₹2,245 or 0.84% to an intraday low of ₹2,65,717 per kilogram. It had risen as much as ₹1,224 or 0.46% to the day’s high of ₹2,69,186 per kilogram, before falling in the negative zone again.

It was trading ₹1,054 or 0.73% lower at ₹2,66,003 per kilogram in business transactions of 5,953 lots at the time of writing.

Internationally, white metal contracts for May slipped as much as 1.89% to the day’s low of $83.505 per troy ounce. At the time of writing, it stood at $84 per troy ounce, marking a 1.31% decline.

Why is gold falling?

Gold is a safe-haven metal, meaning traders flock to it in times of uncertainty. While the yellow metal rallied initially when the war in West Asia began on February 28, it has since given up its gains.

This comes as crude prices surged past the $100 per barrel mark, as the conflict in the Middle East continues, amid the temporary closure of the Strait of Hormuz, a critical passageway for global energy security.

The rise in oil prices has led to fear of prolonged inflation, which might lead to the US Federal Reserve opting for a hawkish policy stance, as per media reports. Higher interest rates increase the appeal of yielding assets, instead of non-yielding assets like gold.

On Friday, crude oil prices in the global market were hovering over the $100 mark.

On the macroeconomic front, investors will be on the lookout for the Personal Consumption Expenditures (PCE) index data, the US Federal Reserve's preferred inflation gauge, due later in the day.

According to the CME Group’s Fedwatch, traders expect the US Federal Reserve to keep policy rates steady at the upcoming Fed meeting from March 17 to 18.

Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, was trading 0.04% higher at 99.77.