Gold and Silver Prices Rebound Strongly on Value Buying and Global Factors
Both gold and silver experienced significant gains during Monday's trading session, marking a robust recovery from recent sharp declines. This upward movement was primarily driven by value buying triggered by the correction, alongside a softening US dollar that bolstered investor sentiment. The rally underscores the resilience of precious metals as safe-haven assets in volatile market conditions.
Global Events Fueling Safe-Haven Demand
Several international developments contributed to the increased demand for gold and silver. The election victory of Japan's conservative party, which advocates for higher fiscal spending, raised expectations of economic stimulus, supporting precious metals. Additionally, a Bloomberg report indicated that China is encouraging local banks to reduce their holdings of US government debt, a move seen as enhancing the appeal of alternative assets like gold and silver.
Further reinforcing this trend, data released over the weekend revealed that the Chinese central bank continued its gold purchases for the 15th consecutive month. This persistent official demand has been a key driver of the prolonged bull run in precious metals, even preceding the recent market downturn, highlighting sustained confidence in gold as a store of value.
Detailed Price Movements in International Markets
Tracking the day's activity, the April futures contract for gold on Comex rebounded sharply, gaining $90 per ounce to reclaim the $5,000 threshold. It reached an intraday high of $5,069 per troy ounce, extending its winning streak to two consecutive sessions. This recovery signals renewed investor interest after the previous month's volatility.
Silver prices, which serve dual roles as both a precious and industrial metal, also regained strength. The March silver contract on Comex surged by $5.23 per ounce, hitting an intraday high of $82. This performance reflects silver's sensitivity to both safe-haven flows and industrial demand dynamics.
Factors Behind the Recent Rally and Correction
Precious metals had been on a record-breaking ascent earlier, fueled by heightened geopolitical risks, concerns over currency debasement, and worries about the Federal Reserve's independence. A wave of speculative buying further amplified the rally before gold and silver experienced a crash at the end of last month. According to Bloomberg, US Treasury Secretary Scott Bessent attributed last week's sharp price swings to "unruly" trading activities in China, pointing to market irregularities as a contributing factor.
Despite a week of choppy trading following the historic reversal, major financial institutions such as Deutsche Bank AG, Goldman Sachs Group Inc., and Pictet Asset Management have expressed optimism about a recovery in bullion. They cite long-term demand drivers, including diversification away from US assets, ongoing policy uncertainty, and elevated central-bank buying, as supportive factors for sustained growth in precious metals.
Domestic Market Performance in India
In the domestic Indian market, the April futures contract for gold on the Multi Commodity Exchange (MCX) crossed the ₹1.55 lakh mark, extending gains for the second straight session. It surged by ₹3,049 per 10 grams to reach an intraday high of ₹1,58,500, demonstrating strong local demand and alignment with global trends.
Similarly, the March silver futures contract opened higher at ₹2,59,887 per kilogram and continued its upward momentum, hitting a day's high of ₹2,68,885. This represented an increase of ₹15,000 from Friday's close of ₹2,49,892, highlighting silver's robust performance in the Indian market as well.
The report also noted that Chinese regulators have advised financial institutions to curb their holdings of US Treasuries, citing concerns over concentration risks and market volatility. This guidance further supports the shift towards assets like gold and silver as part of broader portfolio diversification strategies.
Investors are advised to consult certified experts before making any investment decisions, as market conditions remain subject to rapid changes based on global economic and political developments.
