Gold and silver prices extended their downward trajectory on Monday, marking the third consecutive day of sharp declines on the Multi Commodity Exchange (MCX) futures trade. This persistent slump follows an aggressive round of profit-booking, which has emerged after both precious metals soared to unprecedented record levels in the previous month.
Steep Declines and Market Volatility
The latest fall has been particularly severe for silver, which has now plummeted by a staggering Rs 1.66 lakh per kilogram, translating to a decline of 41.5 percent over just three trading sessions. Market volatility is anticipated to intensify in the near term following an announcement by the CME Group. The global exchange has increased margin requirements for Comex gold and silver futures, effective from Monday.
Higher margins elevate the cost of maintaining leveraged positions, often compelling speculative traders to reduce their exposure. This action can exert additional downward pressure on international bullion prices. Since domestic gold and silver prices on the MCX closely track global benchmarks, sharp movements or weakness originating from the Comex market are typically mirrored in Indian markets, especially during the initial trading sessions.
Global Market Movements and Expert Analysis
While the margin hike does not directly alter MCX regulations, it can dampen risk appetite, trigger broader intraday fluctuations, and postpone bargain-hunting until prices find a stable footing. Currency movements further influence the rupee-denominated impact of these changes. In overseas markets, spot gold slipped 3.3 percent to $4,703.27 per ounce by 0259 GMT, after earlier dropping more than 5 percent to its weakest level in over two weeks. The yellow metal had previously touched an all-time high of $5,594.82 on Thursday.
Spot silver, however, exhibited a divergent trend, gaining 1.6 percent to $85.98 per ounce, though it remains significantly below its lifetime peak of $121.64, also reached last Thursday. Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities, commented, "Going ahead, gold is expected to remain volatile but relatively more stable compared to silver, which may continue to witness exaggerated swings. In the current phase, caution is advisable — a watch-and-learn approach is better until volatility subsides and price structures stabilize."
Support and Resistance Levels
Manoj Kumar Jain of Prithvi Finmart told ET that gold and silver are currently experiencing extreme price fluctuations. He noted that silver might find a floor near $65 per troy ounce, while gold could hold above the $4,440 mark on a weekly closing basis. According to him, volatility in both metals is likely to persist in the near term, influenced by movements in the dollar index and ongoing geopolitical developments.
Jain outlined specific support and resistance zones:
- Gold: Immediate support is seen in the $4,680 to $4,620 zone, with resistance placed between $4,800 and $4,910 per troy ounce.
- Silver: Support is observed in the $67 to $74 range, while resistance lies between $84 and $88.80 per troy ounce during the current session.
Domestic Market Outlook and Investor Advice
In the domestic market, Jain highlighted that MCX gold has support between Rs 1,44,400 and Rs 1,37,700, with resistance in the Rs 1,48,800 to Rs 1,54,000 band. MCX silver is expected to find support between Rs 2,55,500 and Rs 2,44,000, while resistance is seen in the Rs 2,78,000 to Rs 2,92,000 range. He advised investors to refrain from initiating fresh trades until bullion prices demonstrate clearer signs of stability.
Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India.
