Gold, Silver prices drop over 6% on MCX, extend losses in 'bear-market zone' amidst global sell-off

Prices of Gold and Silver on the Multi-Commodity Exchange of India (MCX) fell over 6% on Monday, March 23, as the sell-off in the global markets extended after a disappointing week.

Gold prices with contracts expiring on June 5, fell 5% to ₹1,40,749 on the MCX, while Silver prices for contracts expiring on July 3, fell 6.2% to ₹2,18,578.

While prices of Gold on the MCX are now down 20% from their January peak, those of Silver are down over 43%.

Prices of both Gold and Silver continue to drop in the global markets as well. Gold prices were down 11% last week, marking their worst weekly performance since 1983, while those of Silver were also down 15%, and have now nearly halved from their recent highs of nearly $120 an ounce.

Gold and Silver have remained under pressure ever since the start of the US-Iran war in West Asia, which has sent oil prices soaring and stoked inflation fears across the globe.

Central Bank traders, which were earlier pricing in further monetary easing, are now beginning to factor in rate hikes in their estimates for the year. While the BoE and the ECB may hike rates at least thrice this year, the US Federal Reserve traders are also penciling in a 30% probability of a rate hike by October this year.

Higher interest rates are negative for assets like gold and silver as their are non-interest yielding instruments. Higher inflation, leading to rate hikes, along with a stronger US Dollar are acting as triple headwinds for bullion prices, despite the global uncertainties surrounding the war.