Precious Metals Rally Continues Unabated as Gold and Silver Scale New Peaks
The relentless rally in precious metals shows no signs of slowing down, with both silver and gold extending their record-breaking ascent during Tuesday's trading session. Investors worldwide are increasingly turning to these traditional safe-haven assets as trade and geopolitical tensions escalate, creating a perfect storm for bullish momentum in the commodities market.
Geopolitical Tensions and Trade War Fears Fuel Demand
Market concerns have intensified significantly following US President Donald Trump's threat to increase tariffs on South Korean goods from 15% to 25%. The President cited delays in South Korea's legislative approval of a trade agreement negotiated with the United States last summer, adding another layer of uncertainty to global trade relations.
Adding to the market anxiety are growing worries about a potential US government shutdown. Democratic leaders have reportedly threatened to block a substantial $1.2 trillion funding package if it includes additional allocations for Homeland Security, according to multiple media reports. This political standoff contributes to the overall climate of uncertainty that typically benefits precious metals.
Dollar Weakness Amplifies Commodity Gains
The dollar index plunged to a four-month low of 96.54 during today's session, tracking the US currency against six major peers. A weaker dollar generally provides significant support to commodity prices, as dollar-denominated metals become more affordable for investors holding other currencies.
Simultaneously, investor confidence in US assets appears to be weakening following President Trump's tariff threats, placing additional downward pressure on the greenback. This week also brings the Federal Reserve's first policy decision of the year, with the central bank widely expected to maintain current interest rates. However, concerns about the Fed's independence from political influence remain a focal point for market observers.
Historic Milestones for Indian Precious Metals
In the Indian markets, February gold futures on MCX opened substantially higher at ₹1,58,674 per 10 grams, climbing from the previous close of ₹1,56,037. The contract subsequently reached a new record high of ₹1,59,820, marking an increase of ₹3,783 and crossing the ₹1.59 lakh threshold for the first time in history.
Remarkably, over the last 18 trading sessions (including today), gold prices on MCX have surged by ₹23,073 per 10 grams. In international markets, gold prices achieved their own milestone, soaring past $5,100 per troy ounce to establish a fresh global record.
The silver rally has been even more spectacular. After gaining ₹7,410 per kilogram during Friday's session, the March delivery futures contract strengthened further, skyrocketing an additional ₹30,122 to register a historic peak of ₹3,64,821. This remarkable performance has delivered month-to-date returns of 54%, equivalent to approximately ₹1.27 lakh.
Both precious metals demonstrated exceptional strength last week, with gold gaining 9.5% and silver surging 16.31% following President Trump's threat to impose tariffs on several European countries over Greenland-related issues.
Expert Analysis: Bullish Momentum Likely to Continue
Ponmudi R, CEO of Enrich Money, provided insightful analysis on the current market dynamics. He noted that MCX Gold continues to reflect global strength, supported by a relatively stable USD/INR exchange rate fluctuating between 91.50 and 91.93. According to Ponmudi, the rising channel structure remains firmly intact, with the ₹1,45,000–₹1,50,000 zone serving as a robust dynamic support base.
"Every intraday dip is being absorbed aggressively, reinforcing the strength of the prevailing trend," Ponmudi observed. He added that a clear and sustained breakout above the ₹1,60,000–₹1,62,500 band could potentially open the path toward ₹1,65,000–₹1,70,000 in upcoming sessions. Overall, Ponmudi maintains that the bias remains strongly bullish with buyers firmly controlling the market trend.
Regarding silver, Ponmudi highlighted that MCX Silver continues to display high-beta outperformance following a powerful breakout, easily absorbing every minor correction. He emphasized that the rising channel remains steep and firmly intact, with the 20-day EMA near ₹3,40,000 acting as a strong dynamic support level.
"A sustained trade above ₹3,50,000 keeps momentum decisively bullish. Immediate upside targets are positioned at ₹3,65,000–₹3,70,000, with potential to extend toward ₹3,80,000–₹3,90,000 over the next few months. Any dip toward the ₹3,40,000–₹3,50,000 zone should continue to be viewed as a strong accumulation opportunity within the prevailing uptrend," Ponmudi elaborated.
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