Gold and silver prices suffered significant losses on the MCX in the intraday session on Tuesday, February 17. MCX gold April futures dropped to ₹1,51,244 per 10 grams during the session, falling by more than ₹3,500, or over 2%. On the other hand, MCX silver March contracts suffered a bigger loss of over ₹10,500, or 4.4%, to ₹2,29,352 per kg.
Why are gold, silver prices falling?
Both precious metals are witnessing profit booking amid a sharp rise in the dollar index. Caution ahead of the US-Iran talks, minutes of the US Fed’s last policy meeting and holiday in major markets in Asia due to the Lunar New Year also contributed to the selloff.
The dollar index jumped by almost 0.40% to 97.28, making greenback-backed bullion expensive for buyers in other currencies.
“Gold and silver extended their corrective phase today, weighed down by a stronger US dollar and profit‑booking after the recent rally. With US markets closed yesterday for a holiday, trading volumes remained thin, while the ongoing Lunar New Year holidays in China further dampened activity across Asian markets, contributing to subdued investor sentiment,” Hareesh V, Head of Commodity Research, Geojit Investments Limited, noted.
“Market participants are also turning cautious ahead of key US economic releases this week, including the FOMC meeting minutes and the latest GDP data, both of which could influence expectations on the Federal Reserve’s policy path,” Hareesh added.
Hareesh underscored that despite the prevailing pressure, downside in precious metals may remain limited, as escalating tensions between the US and Iran continue to provide a firm geopolitical floor.
Is it the right time to buy gold and silver?
Gold and silver prices are experiencing heightened volatility. Experts say short-term traders can sell on a bounce.
“Strong dollar and speculations of a positive outcome from the US-Iran talks and US-led Russia-Ukraine talks have triggered a profit booking in prices. Even after the soft US CPI on Friday, the market expects only two Fed rate cuts and not more, which is also contributing to profit-taking. Short-term investors may consider selling the metals on a bounce,” said Jigar Trivedi, Senior Research Analyst at IndusInd Securities.
Anuj Gupta, A SEBI-registered analyst, said the current volatility is not a correction. It is just the profit booking as prices are holding only at this level.
Gupta expects precious metals to remain in a range in the near term, with no clear direction.
“Any geopolitical tensions, US Fed rate cuts can drive the prices higher. However, there is a rumour that Russia may trade in the dollar. If they buy the dollar or if they start trading in dollars, or if the relation between the US and Russia improves further, that will cause a downfall in gold prices,” said Gupta.
On the technical front, gold has been hovering around its 20-DEMA after failing to hold key support last week.
Kaveri More, a commodity analyst at Choice Broking, highlighted that investors should watch ₹1,49,000 as pivotal support for gold and ₹2,25,000 for silver.
“If they break below these levels, there could be more downside pressure,” said More.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
