Gold price updates: Yellow metal and silver prices extended their decline on Monday after a sharp fall on Budget Day, weighed down by CME margin norms, a stronger dollar, higher US yields and hawkish Fed leadership expectations
Representational image. File pic
Gold and silver, after experiencing a major downfall on budget day, continued to extend their decline on Monday. The reasons behind their decline are majorly because the margin requirements are set to take effect on the Chicago Mercantile Exchange (CME) in the US.
MCX gold futures on Monday, February, fell 1.77 per cent to Rs 1,45,132 per 10 grams on an intra-day basis. Meanwhile, MCX silver March futures dipped 6.88 per cent to Rs 2,47,386 per kg.
Gold prices in Mumbai
After the stock market on Sunday experienced a major hit, Gold also went down significantly to Rs 1,60,860. Extending its downfall for a second straight day, the price of 24-carat gold on Monday was recorded as Rs 1,60,850 for 10 grams. Whereas the price of 22-carat gold was recorded at Rs 1,47,470.00 for 10 grams.
Reason for price dip on gold and silver
Analysts said that the free fall of gold and silver from their record highs started after the US President Donald Trump selected Kevin Warsh as the next US Fed Chairman. Investors reacted negatively because Warsh is considered more aggressive on interest-rate policy than earlier chairs, as reported by news agency IANS.
Rahul Kalantri, VP Commodities, Mehta Equities Ltd., while briefing about the market, further stated, “The decline was further supported by a stronger U.S. dollar, higher Treasury yields, and upbeat US inflation data (PPI and core PPI). As import duty was kept unchanged in the Union Budget, the domestic premium in bullion suffered, as reported by IANS.
The analyst further said, "Gold has support at Rs 1,39,650 to Rs 1,36,310 zone while resistance is at Rs 1,48,850 and Rs 1,50,950. Silver has support at Rs 2,48,810 and Rs 2,37,170 while resistance is at Rs 2,78,810 and Rs 2,95,470," the analyst said.
A recent report from WhiteOak Capital Mutual Fund said that investors should trim precious metals allocation back to a safe‑haven allocation level, especially on the silver, as its valuation had reached the most overextended level relative to historical periods.
Another reason for bearishness in precious metals can also because Donald Trump nominated Kevin Warsh as the next Federal Reserve chair which fuelled a recovery in the US dollar.
Analysts further said Warsh would be less supportive of lower interest rates due to his hawkish stance on inflation control and emphasis on Fed independence, which prompted selling among precious-metals traders.
(With inputs from IANS)
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