Precious metals witnessed a sharp decline on Thursday, mirroring volatility in the broader financial markets. Not only did gold prices fall significantly, but gold and silver exchange-traded funds (ETFs) also recorded notable losses during the trading session.

ETFs Register Steep Declines
Gold and silver ETFs dropped by up to 4% during intraday trade. Among silver ETFs, Nippon India Silver ETF fell by 4.04%, while Tata Silver ETF declined by 4.11%.

Gold ETFs also saw losses, with Tata Gold ETF down 2.01%, Nippon India Gold BeES falling 2.22%, and ICICI Prudential Gold ETF slipping 2.16%.

Sharp Fall in Futures Prices
On the Multi Commodity Exchange (MCX), gold futures for June dropped around 3% to ₹1,48,981 per 10 grams. Silver prices saw an even steeper fall, with May futures plunging nearly 6% to ₹2.29 lakh per kilogram.

The decline extended to related stocks as well. Shares of Hindustan Zinc fell over 3%, while Vedanta also slipped by around 2%.

Global Factors Weigh on Prices
International markets also reflected the downward trend. Spot gold prices declined by about 2%, while US gold futures fell 2.5%, ending a four-day rally.

The fall comes amid rising geopolitical tensions in West Asia, particularly involving the United States and Iran. Concerns over prolonged conflict have pushed crude oil prices higher, while also raising fears of inflation.

Interest Rate Concerns Add Pressure
Rising inflation expectations have led to concerns that central banks may delay or reconsider interest rate cuts. Higher interest rates typically reduce the appeal of gold, as it does not offer fixed returns.

Additionally, strengthening of the US dollar and rising bond yields further pressured gold prices, making it less attractive for investors.