Precious Metals Stage Strong Comeback on Friday Trading Session
Gold and silver prices experienced a sharp and notable rebound during trading on Friday, February 7, reversing previous losses as market dynamics shifted favorably. The resurgence was primarily fueled by a combination of a weaker US dollar, robust physical demand for the metals, and persistent geopolitical tensions that continue to drive safe-haven buying.
Domestic and International Market Performance
In the domestic Indian market, MCX gold April futures surged impressively by more than 2%, closing at ₹1,55,374 per 10 grams. Simultaneously, MCX silver March futures demonstrated even stronger momentum, climbing nearly 3% to reach ₹2,50,300 per kilogram. This upward movement was supported by significant short covering activities and fresh hedging initiatives as investors sought protection amid global economic and political uncertainty.
Internationally, spot gold prices climbed 3.9% to settle at $4,954.92 per ounce, effectively recovering from losses experienced during a volatile Asian trading session. This recovery came after gold had plunged 3.9% just the previous day. Spot silver prices showed remarkable strength, surging 8.6% to $77.33 per ounce after having fallen below $65 earlier in the trading day. Despite this substantial daily gain, silver remained on track for a weekly decline exceeding 8.7%, extending the sharp losses witnessed during the previous week as well.
Key Drivers Behind the Precious Metals Rally
The rebound in both gold and silver prices was driven by multiple interconnected factors that created favorable conditions for precious metals appreciation. A primary catalyst was the 0.20% drop in the US dollar index, which made dollar-denominated bullion more affordable and attractive for international buyers across global markets.
Additionally, continued expectations of interest rate cuts by the US Federal Reserve provided substantial support to gold prices. Market sentiment received a further boost from a University of Michigan report indicating that median one-year inflation expectations had declined to 3.5%, representing the lowest level since January 2025. This development strengthened optimism about potential additional Fed rate cuts in the coming months.
On the geopolitical front, discussions between the United States and Iran began on what was described as an encouraging note, though significant uncertainty remained regarding the timeline and direction of future negotiation rounds. This ongoing geopolitical tension contributed to the safe-haven appeal of precious metals.
"Profit booking, a stronger U.S. dollar, and rising real yields triggered the pullback; however, long-term fundamentals remain supportive, including sustained central bank buying, constrained mine supply, strong industrial demand (particularly for silver), and ongoing geopolitical and currency diversification trends," explained Ponmudi R, CEO of Enrich Money.
Investment Outlook and Technical Analysis
According to market analysts, precious metals are currently attempting to stabilize following last week's sharp sell-off. Ponmudi further opined that the medium- to long-term bullish structure for both metals remains firmly intact, with the recent correction helping to unwind excess leverage that had built up during January's rally.
On the technical outlook for gold, Ponmudi noted that MCX Gold is stabilizing after correcting from the ₹1,78,000–₹1,80,000 zone. "Strong demand is emerging near ₹1,50,000–₹1,55,000, while the broader upward channel structure remains intact. A sustained move above ₹1,60,000 could revive bullish momentum toward ₹1,70,000–₹1,80,000+ over the medium term," Ponmudi added.
Regarding silver's outlook, Ponmudi explained that MCX Silver has corrected into the ₹2,30,000–₹2,35,000 support region, which has historically been associated with strong physical and industrial buying activity. "Current price action suggests absorption rather than aggressive distribution. A decisive breakout above ₹2,60,000 could act as a trigger for fresh upside toward ₹2,75,000–₹2,90,000+."
Meanwhile, Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities, provided additional perspective, noting that major U.S. data releases this week have kept market sentiment slightly cautious. "Prices continue to find strong support near $4,800 on CME and around ₹1,49,000 on MCX. Immediate resistance is now seen near $4,925 and ₹1,55,000, with volatility likely to persist around key data triggers," Trivedi stated.
Disclaimer: This analysis is for educational purposes only. The views and recommendations presented above are those of individual analysts or broking companies. Investors are strongly advised to consult with certified financial experts before making any investment decisions.
