Silver prices surged by Rs 11,000 to Rs 2.51 lakh per kilogram in the national capital on Wednesday, while gold rose to Rs 1.56 lakh per 10 grams, tracking firm global trends after a ceasefire understanding between the United States and Iran.
According to the All India Sarafa Association, silver climbed nearly 5 per cent from Rs 2.40 lakh per kg in the previous session. Gold of 99.9 per cent purity increased by Rs 3,200 from Tuesday’s close of Rs 1.53 lakh per 10 grams.
Market participants attributed the rise in bullion prices to easing geopolitical tensions after a two-week ceasefire agreement announced by Donald Trump. The agreement is linked to the reopening of the Strait of Hormuz, a key route for global crude shipments.
"Gold maintained strong gains and approached a three-week high on Wednesday as improved global risk sentiment, along with a pullback in US dollar and crude oil prices, boosted demand for precious metals," Saumil Gandhi, senior analyst of commodities at HDFC Securities, said.
Iran indicated that safe passage through the Strait would be allowed during the ceasefire period, easing concerns over supply disruptions. Crude oil prices declined sharply, which supported gains across commodities, equities and bonds.
In the international market, spot gold rose by USD 97.48, or 2.07 per cent, to USD 4,803.33 per ounce. Silver traded 6 per cent higher at USD 77.33 per ounce.
"Spot gold in the international markets surged on Wednesday after the announcement of a temporary ceasefire in the Iran war," Praveen Singh, head of commodities at Mirae Asset Sharekhan, said.
He added that a fall of nearly 20 per cent in crude oil prices following the ceasefire supported gains across asset classes and could ease pressure on interest rate decisions by central banks, including the US Federal Reserve.
Kaynat Chainwala, AVP commodity research at Kotak Securities, said, "precious metal prices rose up to 7 per cent as the dollar slipped below 99 on US-Iran ceasefire relief, temporarily easing fears of prolonged energy supply shocks and the associated inflationary fallout."
She added, "The rally in bullion ran alongside a broader relief rally in global markets. Throughout the conflict, gold's traditional safe-haven appeal has been tempered by liquidity stress, as investors were compelled to liquidate bullion positions to cover losses elsewhere in their portfolios."
"With the ceasefire conditional and compliance around the Strait of Hormuz still uncertain, any signs of a breach or collapse could quickly reverse sentiment and renew downside risk across precious metals," Chainwala said.
