New Delhi

Precious metals witnessed a sharp decline in the domestic market on Wednesday, with gold falling by Rs 4,300 per 10 grams and silver plunging by Rs 10,000 per kilogram, as rising crude oil prices and a stronger US dollar dampened investor appetite for bullion.

According to market participants, gold of 99.9 per cent purity dropped nearly 3 per cent to Rs 1,56,000 per 10 grams, inclusive of taxes, from its previous closing level of Rs 1,60,300 per 10 grams.

Silver also came under heavy selling pressure, sliding 4 per cent to Rs 2,45,700 per kilogram from Tuesday's closing price of Rs 2,55,700 per kilogram.

Analysts attributed the sharp correction to renewed geopolitical concerns involving the United States and Iran, which pushed international crude oil prices above the USD 90 per barrel mark and boosted the strength of the US dollar.

Rajkumar Subramanian, Head of Product and Family Office at PL Wealth, said the rally in energy prices had revived fears of persistent inflation and the possibility of interest rates remaining elevated for a longer period. Such conditions tend to reduce the appeal of non-yielding assets such as gold and silver.

The weakness in domestic bullion prices mirrored the trend in global markets.

In overseas trade, spot gold declined by USD 90.53, or 2.13 per cent, to trade at USD 4,168.99 an ounce. Silver also weakened, slipping 2.24 per cent to USD 63.87 an ounce.

Gaurav Garg, Research Analyst at Lemonn Markets Desk, said the downturn in precious metals was largely driven by a firmer US dollar and rising yields on US Treasury bonds.

"The appreciation in the dollar and higher bond yields reduced the attractiveness of bullion investments, even as geopolitical uncertainties and inflation concerns persisted," he noted.

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Market experts said investors are now closely monitoring developments in global energy markets and the trajectory of US interest rates, both of which are expected to influence the near-term direction of gold and silver prices.