Precious metals in the domestic market displayed a reversal trend on Tuesday following a significant decline. Gold and silver, which had previously reached record highs, experienced a drop. MCX gold February futures increased by 0.59% to Rs 1,35,744 per 10 grams, while MCX silver March futures surged by 4.08% to Rs 2,33,700 per kg.
In global markets, spot gold plummeted by 4.5% on Monday to $4,330.79 per ounce. Similarly, US gold futures for February delivery closed 4.6% lower at $4,343.60. The decline came after an initial surge that saw gold reaching $4,584 per troy ounce and silver climbing to $82.67 per ounce, but both metals failed to sustain these gains. Analysts attributed the pullback mainly to extended long positions, an increase in margin requirements by the Chicago Mercantile Exchange (CME), and the impact of thin holiday trading that magnified intraday fluctuations.
Despite the retreat, there is still a demand for these metals as safe havens. This demand is evident as Russia’s President Vladimir Putin informed US President Donald Trump about a potential review of Russia’s stance in peace talks following a “Ukrainian drone attack on a Russian presidential residence.” The rally of silver is being supported by tighter inventories and the potential for quick evaporation of liquidity. Unlike gold, silver lacks a reserve similar to the London gold market, which has approximately $700 billion of bullion available for lending during liquidity crises, as highlighted by analysts.
Analysts from Mehta Equities Ltd., including Rahul Kalantri, VP Commodities, mentioned that safe-haven demand arising from tensions between the US and Venezuela, along with renewed hostilities between Russia and Ukraine, could provide support at lower levels. Gold is expected to find support in the Rs 1,33,550-Rs 1,31,710 zone, with resistance in the Rs 1,36,850-Rs 1,38,670 zone. Silver, on the other hand, is anticipated to have support in the Rs 2,19,150-Rs 2,17,780 range, with resistance at Rs 2,26,810-Rs 2,28,970 zones.
A recent report from Motilal Oswal Financial Services Ltd. highlighted persistent inventory reductions in major global hubs, weakening arbitrage between Shanghai and COMEX, and ongoing delivery pressures that have exposed the limited availability of deliverable silver.
