The precious metal saw a sharp decline in the international market, falling by $436 to settle at $4,250 per ounce.
The country witnessed a record-breaking decline in gold prices on Monday, marking the largest single-day drop ever after a sharp fall in the international market.
Gold per tola dropped by Rs43,600, bringing the price down to Rs447,762, while 10 grams fell by Rs37,380 to settle at Rs383,883.
In global markets, gold also saw a steep decrease, falling by $436 to $4,250 per ounce.
Market analysts described this as the most significant one-day fall in gold prices on record. Overall, the per-tola price has now declined by around Rs125,000 from its all-time high.
Driven by a stronger US dollar, gold plunged more than 8% at one point on Monday, reaching a four-month low after recording its biggest weekly loss in about 43 years, according to Reuters.
Investors moved quickly to unwind positions amid a strengthening US dollar and growing expectations of interest rate hikes in the United States.
Spot gold fell 4.9% to $4,266.47 per ounce by 1017 GMT, extending its losses to a ninth consecutive session. Earlier in the day, it had dropped more than 8% to $4,097.99, its lowest level since November 24.
The precious metal has declined about 22% since the Middle East conflict began on February 28, and is down roughly 25% from its record high of $5,594.82 reached on January 29.
US gold futures for April delivery also slipped, falling 6.7% to $4,267.50.
A stronger dollar and rising benchmark 10-year US Treasury yields added further pressure on gold prices. While gold is often seen as a hedge against inflation, higher energy costs linked to the Iran conflict have fueled expectations of increased interest rates, reducing the appeal of non-yielding bullion.
“Markets are no longer expecting any rate cuts from the Federal Reserve this year and have begun pricing in the possibility of rate hikes, which is strengthening the US dollar and adding to gold’s weakness,” said Nikos Tzabouras.
He added that gold is also under pressure due to a “search for cash” and a shift of investment into energy commodities.
Market expectations for a US rate hike have increased significantly, with futures now suggesting that the Federal Reserve is more likely to raise rates than cut them by the end of 2026, according to CME’s FedWatch tool.
Gold’s decline to its lowest level since November has brought it back to its 200-day moving average. However, some analysts believe the broader outlook remains positive, noting that the metal is still up about 42% over the past year.
Ole Hansen said that once the current wave of forced selling subsides, gold’s outlook could improve significantly.
Other precious metals also saw sharp declines, with spot silver falling 5.5% to $64.01 per ounce and platinum dropping 7.2% to $1,783.30. Both metals had earlier touched their lowest levels since mid-December.
Palladium also slipped, declining 2.1% to $1,374.73.
About the Author
