Silver and Gold Prices Update: Silver Drops by Rs 15,000 on MCX, Gold Falls Below Rs 1.5 Lakh – Is It Time to Buy?
Gold and silver prices faced significant declines on the Multi Commodity Exchange (MCX) on Friday, driven by weak global cues and a strengthening US dollar. This marked the second consecutive day of losses for both metals, erasing much of the gains made earlier in the week amid a broader sell-off in technology stocks. Silver futures for March 5 delivery plummeted by 6%, while gold futures for April 2 delivery also saw a notable drop, reflecting the ongoing volatility in the precious metals market.
Market Performance and Price Movements
On the MCX, silver futures for March 5 delivery fell sharply by Rs 14,628, settling at Rs 2,29,187 per kg. Gold futures for April 2 delivery also experienced a decline, dropping by Rs 2,675 to trade at Rs 1,49,396 per 10 grams. Internationally, gold prices showed mixed trends, with spot gold rising by 0.4% to $4,790.80 per ounce, although it remained down 1.4% for the week. In contrast, US gold futures for April delivery fell by 1.7% to $4,806.50 per ounce. Silver prices remained relatively stable at $71.32 an ounce after a significant drop of 19.1% in the previous session, with earlier trading on Friday seeing silver dip below the $65 mark, reaching its lowest level in over a month and a half.
Impact of Margin Hikes on Trading
The MCX has implemented further margin hikes on precious metal contracts, adding to the existing volatility in the market. Following a 4.5% increase in margins on silver futures and a 1% increase on gold futures effective February 5, an additional margin of 2.5% on silver and 2% on gold futures was imposed starting Friday. This brings the total additional margin requirement to 7% for silver and 3% for gold from February 6 onwards. These higher margin requirements necessitate more capital from traders, often leading to reduced speculative and leveraged positions. In volatile market conditions, this can trigger profit booking or forced unwinding of positions, particularly in silver contracts, further pressuring prices and increasing intraday fluctuations.
Market Sentiment and Future Outlook
Market participants are closely watching developments surrounding the US-Iran nuclear deal talks, which could significantly influence the direction of precious metals. Manoj Kumar Jain from Prithvi Finmart noted that both gold and silver are currently experiencing high price volatility. He suggested that silver may find support near $65 per troy ounce, while gold could hold support around $4,440 per troy ounce on a weekly closing basis. Jain indicated that volatility is likely to persist due to fluctuations in the dollar index, a partial shutdown in the US, and ongoing geopolitical tensions. He set gold’s support levels for the day at $4,770–$4,640 per troy ounce, with resistance at $4,955–$5,050. For silver, support is anticipated between $71.20 and $64.00, while resistance is seen in the $84.40–$88.80 range.
Investment Advice Amidst Market Instability
In light of the current market conditions, Jain advised investors to exercise caution and consider staying away from precious metals until stability returns. On the MCX, he identified gold support levels at 150,500–147,700 and resistance at 154,200–155,800. For silver, support is projected at 225,000–212,000, with resistance between 254,000–264,000. As the market continues to navigate through these turbulent times, investors are encouraged to remain vigilant and informed about the evolving landscape of precious metals trading.
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