Silver Price Drops 1.5% on MCX: Factors Contributing to Decline

Precious Metals Report - March 19

Key Developments

• Silver prices declined 1.5% on March 19, while gold prices lost 0.8% due to a hawkish stance from the US Federal Reserve in its March meeting.
• Spot silver rose 1.5% to $76.52 per ounce, while spot gold gained 0.8% to $4,856.82 per ounce, stabilizing after recent weakness.
• US gold futures for April delivery slipped 0.8% to $4,858.60.

Market Analysis

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The decline in precious metals was largely driven by the US Federal Reserve and the Bank of Canada striking a hawkish tone in their latest policy updates. Despite keeping interest rates unchanged, both central banks warned of a potential sustained inflationary cycle due to rising energy prices linked to the Iran conflict.

Key Drivers

• US Federal Reserve: Signalled just one rate cut for the year, falling short of market expectations for a more accommodative path.
• Bank of Canada: Also warned of rising energy prices and geopolitical tensions.
• Geopolitical Risks: US President Donald Trump's administration is considering deploying thousands of troops to strengthen operations in the Middle East, signalling a potential escalation in the conflict.
• Crude Oil Prices: Surged more than 5% to above $110 per barrel after Iran launched attacks on energy infrastructure across the Middle East.

Market Outlook

Read also: Gold and Silver Prices in India: A Review of Current Rates Across Major Cities

Precious metals are likely to remain volatile, caught between competing forces of safe-haven demand, inflation pressures, and restrictive monetary policy. Rising oil prices have added to inflation concerns, supporting gold as an inflation hedge.