Mumbai, Feb 2 Gold and silver extended their decline on Monday, as hike in margin requirements are set to take effect on Chicago Merchantile Exchange (CME) in the US.
MCX gold February futures 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.
Analysts said 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, they added.
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, said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
In international markets silver could find support near $68, while gold may hold around $4,510 this week, analysts forecasted. Spot gold recovered considerably after dropping 4 per cent in early morning session on Monday, during the Asian trading hours.
"Gold has support at Rs 1,39,650 to Rs 1,36,310 zone while resistance 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 at Rs 2,78,810 and Rs 2,95,470," the analyst said.
According to them, the broader market trend for COMEX gold remains constructive, even as the recent vertical rally pushed momentum indicators into overbought territory, leading to heat-driven profit booking and mild price digestion from elevated levels.
Structural supply deficits and steady industrial demand continue to underpin the bullish bias in silver. Persistent safe-haven demand, steady central-bank accumulation, and expectations of accommodative global monetary conditions continue to underpin prices of yellow metal.
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 over-extended level relative to historical periods.
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