Metals dearer: Silver soars to Rs 3L/kg, gold nears Rs 1.5L/10gm

Mumbai: Metal prices are on a tear globally as geopolitical tensions, rising chances of a rate cut in the US, higher demand from some of the fast-growing industries like EV, solar and semiconductors for these metals, and expectations of higher demand from China have added to the tailwinds.

On Wednesday, silver crossed the $90-per-ounce (Oz) mark in the international market while gold crossed the $4,600/Oz mark.

The rub-off effect, combined with the rupee’s recent weakness, pushed silver prices in the local spot markets to above Rs 3 lakh/kg mark while on the MCX, futures contracts for March delivery were trading at above the Rs 2.9 lakh/kg mark. Gold prices in the local spot markets traded near the Rs 1.5 lakh/10gms mark while on MCX, futures contracts for Feb delivery were trading at near the Rs 1.44 lakh/10gm mark. Both domestic and international prices were all-time highs.

In addition to the strong rally in the prices of the two precious metals, prices of copper and tin also hit all-time highs in international markets, news reports said. During the day, top officials from Denmark and Greenland were scheduled to meet the US vice president J D Vance, while in Asia, Iran threatened its neighbours to hit US military bases if Washington intervened in the protests in the Islamic nation. Both the developments added to the already tense geopolitical situations around the world, reports said.

“Geopolitical risks continue to mount, with the US stepping up its involvement in Venezuela, President Donald Trump warning of possible military action amid unrest in Iran, ongoing conflict in Ukraine, tensions between China and Japan, and renewed insistence by the White House on acquiring Greenland,” said Renisha Chainani, Head Research, Augmont, a precious metals dealer and advisory firm.

The ongoing tussle between the US Department of Justice and the Federal Reserve heightened the chances of a rate cut in the US, which added to the bullish sentiment for metals. Since most metals are priced in dollars, a rate cut in the US usually weakens the dollar, making it cheaper against other major currencies, that in turn make metals cheaper for buyers in those other major currencies. This leads to higher demand for those metals, pushing up prices.

Outside of precious metals, base metals have broadly benefited from expectations of tighter supply this year as global mines and smelters struggle to keep up with demand, a Bloomberg report said. The copper market saw multiple major disruptions last year, while aluminium faced constraints in top producer China, and tin exports were crimped from second-biggest supplier Indonesia, it said.