MCX Gold Rate Plunges 3%, Silver Falls 6% Amid Decline in Precious Metals

Gold and Silver Prices Plummet Amid Global Market Weakness

Gold futures on the Multi Commodity Exchange (MCX) opened with a 3% cut at ₹161,092 per 10 grams on March 3, tracking the weakness in international markets. The decline in domestic futures mirrored the global trend, with US spot gold prices breaching the $5,200 mark and silver prices crashing 11% below the $80 level.

The weakness in gold and silver prices can be attributed to fading expectations of an interest rate hike in the US by the Federal Reserve. The US Federal Reserve is expected to hold rates at the conclusion of its next two-day meeting on March 18, as suggested by CME Group's FedWatch tool. This has resulted in a decrease in demand for gold, which thrives in a low-interest-rate environment.

However, the conflict in the Middle East has prompted investors to seek safe havens, resulting in a gain in gold prices. US President Donald Trump announced that the US would continue its military offensive, and Israel launched a "wave of strikes" targeting Iran's command centres. The concerns over crude oil supply through the Strait of Hormuz have added to inflationary fears, supporting bullion prices.

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According to Gaurav Garg, Research Analyst at Lemonn Markets Desk, the pronounced risk-off sentiment has driven the rally in gold and silver prices. He expects the volatility in the bullion market to remain heightened and predicts a gold price target of ₹1,70,000 per 10 grams and a silver rate target of ₹3,00,000 per kg in the near term.