Gold prices experienced a significant decline in the domestic futures market on Thursday morning, driven by a combination of profit booking activities and reduced geopolitical tensions. The Multi Commodity Exchange (MCX) witnessed sharp corrections in precious metals as traders capitalized on recent gains amid a more stable global environment.
Sharp Decline in Precious Metals
MCX gold April futures contracts crashed by approximately 2%, settling at ₹1,50,383 per 10 grams during early trading hours. This substantial drop reflects the immediate impact of profit-taking behavior among investors who had previously accumulated positions during periods of heightened uncertainty.
Silver Contracts Plunge Even More
In a more dramatic move, MCX silver March contracts plunged by a staggering 6%, reaching ₹2,52,719 per kilogram. The sharper decline in silver prices highlights the increased volatility often associated with this industrial precious metal compared to gold.
Key Factors Driving the Correction
Profit Booking Takes Center Stage
Market analysts attribute the primary driver of this correction to widespread profit booking. As geopolitical risks have shown signs of easing, investors who had positioned themselves defensively in gold and silver are now liquidating portions of their holdings to lock in gains from previous rallies.
Dollar Index Strength Adds Pressure
A concurrent sharp jump in the dollar index has further weighed on gold prices. Since gold is typically priced in US dollars internationally, a stronger dollar makes the precious metal more expensive for holders of other currencies, thereby reducing demand and putting downward pressure on prices.
Market Context and Expert Insights
The correction comes after a period of sustained strength in precious metals, which had benefited from safe-haven demand during times of geopolitical uncertainty. With tensions showing signs of de-escalation, market participants are reassessing their positions in these traditional safe-haven assets.
Financial experts are closely monitoring key technical levels that could determine the next directional move for gold and silver prices. The current price action suggests that while the immediate trend appears bearish, fundamental factors could provide support at lower levels.
What Traders Should Watch
Market participants are advised to monitor several critical factors:
- The pace of geopolitical developments and their impact on risk sentiment
- Movements in the US dollar index and their correlation with precious metals
- Technical support and resistance levels that could trigger further buying or selling
- Domestic demand patterns that might provide a floor for prices
This market movement underscores the dynamic nature of commodity trading, where prices can shift rapidly based on changing global circumstances and investor sentiment. As the trading session progresses, market participants will be watching for any fresh developments that could influence precious metals pricing.
