Daijiworld Media Network - New Delhi
New Delhi, Feb 2: Gold and silver prices continued their sharp downward trend for the third consecutive session on Monday, slipping further in futures trade on the Multi Commodity Exchange (MCX), as aggressive profit booking followed last month’s record-breaking rally.
Market data showed that silver prices have dropped by about Rs 1.66 lac per kg, or over 41 per cent, in just three trading sessions, underscoring the intensity of the recent correction. Gold prices also remained under pressure, reflecting broader weakness in global bullion markets.
A section of experts attributed the sharp fall to heavy profit taking by traders after both metals surged to all-time highs in the previous month. They also pointed to rising volatility after CME Group announced an increase in margin requirements for Comex gold and silver futures, effective from Monday. Higher margin requirements raise the cost of holding leveraged positions, often forcing speculative participants to reduce exposure, which can add to downward pressure on prices.
Although the margin hike does not directly impact MCX contracts, analysts noted that Indian bullion prices closely track international benchmarks. As a result, sharp movements on Comex are usually mirrored in domestic markets, especially during early trading sessions. Experts said the margin increase could dampen risk appetite, lead to wider intraday swings and delay fresh buying interest until prices show signs of stabilisation. Currency fluctuations were also seen as a key factor influencing rupee-denominated bullion prices.
In overseas markets, spot gold slipped sharply, touching its weakest level in more than two weeks after falling over five per cent at one point, before trading lower by around three per cent. The metal had touched a record high only last week. Spot silver, meanwhile, showed limited recovery in international trade but remained well below its recent lifetime peak.
According to a section of market analysts, gold is expected to remain volatile in the near term but could be relatively more stable than silver, which may continue to witness sharper and exaggerated price swings. They advised investors to adopt a cautious approach and wait for clearer price signals before taking fresh positions.
Experts tracking technical levels indicated that international gold prices have multiple support zones at lower levels, while resistance is expected to cap any immediate recovery. Silver is also seen to have key support levels below current prices, with strong resistance likely to emerge on any rebound.
In the domestic market, analysts observed that MCX gold and MCX silver are trading near crucial support zones, and any sustained break below these levels could lead to further downside. Resistance bands remain significantly higher, suggesting limited upside in the short term unless volatility eases.
Overall, market participants were advised to remain cautious and avoid fresh trades until bullion prices stabilise and volatility subsides, as sharp intraday movements are likely to persist in the near term.