Mumbai, India: Gold and silver prices in India witnessed a significant decline on February 27, 2025, as global market fluctuations and economic factors weighed on investor sentiment. The price of 24-carat gold fell by ₹1,000 per 10 grams, while silver prices dropped below ₹1 lakh per kilogram, marking a notable correction from their recent highs. The decline is primarily driven by a strengthening US dollar, Federal Reserve policies, and changes in global spot prices of precious metals.
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Gold and Silver Prices See a Downtrend Across India
Gold prices in key cities such as Mumbai, Delhi, Chennai, and Kolkata saw a decline, with 22-carat and 24-carat gold rates adjusting downward. Similarly, silver prices, which had recently touched ₹1,02,000 per kg, dropped sharply to ₹99,200 per kg, reflecting global price movements. The volatility in precious metal prices has kept traders and investors cautious, with many waiting for stability before making fresh purchases.
Global Factors Influencing Gold and Silver Prices
Strengthening of the US Dollar
One of the key reasons for the dip in gold prices is the appreciation of the US dollar against major global currencies. A strong dollar makes gold more expensive for foreign investors, leading to reduced demand and a subsequent price correction. The US dollar index (DXY), which measures the dollar’s strength against other currencies, has been on an upward trend, putting pressure on commodities like gold and silver.
Impact of Federal Reserve Policy on Gold
The US Federal Reserve’s recent stance on delaying interest rate cuts has also played a crucial role in the declining prices of gold. With expectations of higher interest rates persisting longer than anticipated, investors have shifted toward higher-yielding assets, reducing gold’s appeal as a safe-haven investment. The higher bond yields in the US have made gold less attractive, leading to capital outflows from the commodity market.
Decline in Global Spot Prices of Precious Metals
On the international front, gold prices on COMEX dropped to $2,018 per ounce, registering a 0.35% decline. Similarly, silver prices on COMEX fell by 0.90% to $22.75 per ounce. This downward trend has been reflected in domestic markets, impacting gold and silver rates across India. The London Bullion Market also reported a drop in gold demand, further influencing price movements.
Domestic Demand and Market Sentiment
Jewelry Demand and Seasonal Trends
Despite gold’s traditional demand during wedding seasons and festivals in India, the recent dip has slowed retail purchases. Many investors and jewelry buyers are waiting for further corrections before making bulk purchases. Analysts suggest that the wedding season in March and Akshaya Tritiya in April might revive demand, but short-term fluctuations remain a concern.
Silver’s Industrial Demand and Market Uncertainty
Silver, often regarded as both a precious metal and an industrial commodity, has been affected by declining industrial demand in sectors like electric vehicles (EVs) and solar panel manufacturing. The dip in global economic activity has lowered silver consumption, leading to a drop in its price. If industrial production picks up in the coming months, silver may see a rebound above ₹1,05,000 per kg.
Gold and Silver Price Trends Over the Past Month
Gold prices had touched a peak of ₹62,800 per 10 grams earlier in February before correcting to ₹61,800 today. The metal remains volatile, with analysts predicting fluctuations between ₹60,500 and ₹62,500 depending on economic conditions.
Silver, which had crossed the ₹1 lakh mark, has now dropped to ₹99,200 per kg, with market watchers expecting further price movement based on global manufacturing demand and interest rate decisions by major economies.
Investment Outlook: What’s Next for Gold and Silver?
Experts believe that gold prices may remain volatile in the short term due to global uncertainties. If inflation persists and geopolitical tensions escalate, gold could rebound above ₹62,500 per 10 grams. However, if the US economy strengthens further and interest rates remain high, gold prices might test ₹60,500 levels before stabilizing.
For silver, analysts expect prices to remain under pressure unless there is a revival in industrial demand. If demand for EVs, solar panels, and electronics grows, silver could see a strong rebound past ₹1,05,000 per kg. Investors are advised to monitor global economic indicators and central bank policies before making investment decisions in precious metals.
Conclusion
Gold and silver prices in India have experienced a sharp correction due to global economic factors, a strong US dollar, and declining investor demand. While gold remains a preferred safe-haven asset, short-term volatility is expected before stability returns. Silver’s industrial demand will play a key role in determining its future price trajectory. Investors should stay updated on international trends and central bank decisions before making major investment moves in precious metals.
