Gold and silver prices plunge amid market turmoil and recession fears

Gold, traditionally seen as a safe-haven asset, tends to perform well when interest rates are low.

Gold prices fell over 2 percent in volatile trading on Monday, as investors liquidated positions in response to a broader selloff in equities. Spot gold was down 2 percent to $2,393.66 per ounce by 1139 GMT (0400 IST), while U.S. gold futures saw a 1.4 percent decline, settling at $2,434.10.

The broader market turmoil saw Japanese shares plummet, surpassing their losses from the 1987 Black Monday. This downturn was driven by mounting fears of a U.S. recession, prompting investors to offload risk assets. Recent data revealed a jump in the U.S. unemployment rate to 4.3 percent in July, increasing expectations that the Federal Reserve might cut interest rates by up to 50 basis points in September.

Gold, traditionally seen as a safe-haven asset, tends to perform well when interest rates are low. However, the current market sentiment has led to a drop in bullion prices. Other precious metals also experienced declines: spot silver fell 5.7 percent to $26.92 per ounce, platinum decreased 4.1 percent to $918.35, and palladium dropped 4.5 percent to $849.05, reaching its lowest level since August 2018. The metals have been under pressure due to concerns over the long-term risks associated with the transition to net zero emissions.

In the local market, gold prices rose by Rs 250 to Rs 72,800 per 10 grams, driven by increased demand from jewelers. This followed a drop to Rs 72,550 per 10 grams in the previous session. Silver prices extended their losses for the third consecutive day, tumbling Rs 1,300 to Rs 84,200 per kg due to reduced offtake by coin makers and industrial units. Silver had previously ended at Rs 85,500 per kg.

Gold of 99.5 percent purity saw an increase of Rs 250 to Rs 72,450 per 10 grams, up from Rs 72,200 per 10 grams in the prior session. Internationally, Comex gold traded at $2,461.10 per ounce, down $8.70 from the previous close. Silver was quoted lower at $27.47 per ounce in New York.

On the Multi Commodity Exchange (MCX), gold futures for October delivery plunged Rs 309 or 0.44 percent to Rs 69,480 per 10 grams, hitting an intra-day low of Rs 69,453 per 10 grams. Silver contracts for September delivery also fell, declining by Rs 2,719 or 3.3 percent to Rs 79,774 per kg on the MCX.

(With inputs from agencies)