MCX gold slumps over ₹700 to ₹1.55 lakh/10 gms; silver tanks 1% ahead of Fed policy meet

At around 2:16 PM, the yellow metal contract was trading ₹554 or 0.36% lower at ₹1,55,431 per 10 grams in business transactions of 7,690 lots, tracking a decline in global prices ahead of the US Federal Reserve policy meeting.

In the international market, COMEX gold (April expiry) declined as much as 0.5% to the day’s low of $4,984.90 per troy ounce. At the time of writing, it stood at $4,989.50 per troy ounce, marking a 0.37% drop.

Similarly, silver contracts for expiry in May slumped as much as ₹3,612 or 1.43% to touch an intraday low of ₹2,49,501 per kilogram on the MCX, as against the close of ₹2,53,113 per kilogram on Tuesday. It was trading at ₹2,51,802 per kilogram at the time of writing, down by ₹1,311 or 0.52% in business transactions of 5,835 lots.

Globally, COMEX silver (May delivery) fell as much as 2.13% to the session’s low of $78.22 per ounce. At the time of writing, it was trading 0.66% lower at $79.39 per ounce.

Why are prices falling?

As per the CME Group’s Fedwatch, the US Federal Reserve is widely expected to hold its policy rate steady, for its second consecutive time, at its upcoming policy meeting scheduled on March 17-18.

The inflationary impact of rising energy prices is delaying expectations of monetary easing, creating mixed signals for the precious metals, she said.

Chainani further stated that the Federal Reserve is expected to maintain a pause, reinforcing a "wait-and-watch" approach amid sticky inflation and a softening labour market.

A similar policy stances by the European Central Bank, Bank of England, and Bank of Japan indicate a synchronised global pause, she said, adding that the outlook for the yellow metal will hinge on forward guidance from central banks, with any dovish tilt reviving bullish momentum in bullion prices, she said.

Meanwhile, geopolitical tensions remained elevated as the United States and Israel continued strikes in Iran, while Tehran stepped up attacks on energy infrastructure across the Persian Gulf, keeping the investors on edge.

In addition, Iran confirmed that its national security chief, Ali Larijani, had been killed, following earlier Israeli claims he died in an airstrike, adding geopolitical uncertainty.