Gold and Silver Prices Plummet: Silver Reaches Lower Circuit at Rs 2.65 Lakh in Futures Trading
Gold and silver prices have experienced a significant downturn in recent trading sessions, raising concerns about the sustainability of their recent bull run. In just two days, silver prices plummeted by 9%, while gold saw a decline of approximately 3%. This sharp drop follows a period of record highs, prompting investors to reassess their positions and book profits. The volatility in the precious metals market has left many wondering if this trend will continue.
Silver Prices in Free Fall
The Multi Commodity Exchange (MCX) reported a dramatic fall in silver futures for March delivery, which crashed by Rs 26,273, reaching a settlement price of Rs 2,65,652 per kg. This decline follows a previous session where silver had already dropped by Rs 1,07,968, marking a staggering 27% decrease. Over the last two trading sessions, silver has lost a total of Rs 1,34,241, translating to a cumulative decline of 33.6%. On a weekly basis, the metal has seen a nearly 21% drop, equating to Rs 69,047 from its January 23 price of Rs 3,34,699 per kg. The swift decline in silver prices has raised alarms among investors, who are now closely monitoring market trends.
Gold Remains Volatile
Gold prices have also shown considerable volatility during recent trading sessions. On Sunday, the April contract for gold futures initially fell by as much as 9%, hitting a low of Rs 1,38,634 per 10 grams before partially recovering to settle at Rs 1,48,104 per 10 grams. This still represented a decrease of Rs 4,241, or 3%, for the day. In the previous session, gold had plunged by Rs 31,617, or 17.2%, after reaching a record high of Rs 1,93,096 per 10 grams on Thursday. Pranav Mer, Vice President of EBG – Commodity & Currency Research at JM Financial Services Ltd, commented on the situation, stating that the rapid rise in bullion prices led to the current crash. He noted that gold has fallen about 20%, while silver has dropped nearly 37% from their respective record highs in the domestic market.
Global Market Influences
While global futures markets were closed on Sunday due to a holiday, the previous trading session saw even sharper losses in international bullion markets. Comex gold futures for April delivery fell by $612, or 11.39%, settling at $4,763.10 per ounce after reaching a lifetime high of $5,626.8 per ounce. Similarly, silver futures on the Comex dropped by $35.89, or 31.37%, closing at $78.53 per ounce after hitting a record high of $121.78 per ounce just a day earlier. Analysts attribute the sharp correction in bullion prices to a stronger US dollar, following comments from Federal Reserve Chair Jerome Powell indicating that interest rate cuts are unlikely in the near future. Additionally, the nomination of former Federal Reserve Governor Kevin Warsh as the next Fed Chair has raised concerns, as he is traditionally viewed as favoring higher interest rates.
Market Outlook
Looking ahead, market analysts suggest that profit booking and long liquidation are evident as traders prepare for the near-month futures expiry in both international and domestic markets. The global commodity exchanges have also increased margin requirements for gold and silver, a move that could further heighten price volatility. Pranav Mer indicated that more corrective moves may be expected in the upcoming trading sessions, although he anticipates a potential recovery and consolidation of prices thereafter. As the market continues to react to these developments, investors remain cautious and vigilant.
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