Precious metals faced substantial selling pressure in Thursday's trading session as gold and silver futures contracts witnessed notable declines on both domestic and international markets. The downturn was primarily driven by weak global cues and diminishing expectations for near-term interest rate cuts from the US Federal Reserve.
Market Performance Details
On the Multi Commodity Exchange (MCX), gold contracts scheduled for February 5 delivery dropped by 0.54 percent, settling at Rs 62,220 per 10 grams. The bearish trend extended to silver as well, with March silver futures declining by 0.65 percent to Rs 71,490 per kilogram. The trading activity reflected cautious investor sentiment amid evolving economic indicators.
International markets mirrored this downward trajectory, with spot gold on COMEX falling 0.47 percent to $2,023.90 per ounce. Similarly, spot silver prices decreased by 0.76 percent to $22.48 per ounce. The synchronized movement across global exchanges highlighted the interconnected nature of precious metals markets and their sensitivity to macroeconomic factors.
Key Factors Driving the Decline
Market analysts identified several critical elements contributing to the precious metals slump. Diminishing expectations for early interest rate cuts by the US Federal Reserve emerged as the primary catalyst, with recent economic data suggesting sustained strength in the American economy. This development has reduced the appeal of non-yielding assets like gold and silver.
Additionally, strengthening US Treasury yields and dollar performance created additional headwinds for precious metals. The relationship between these financial instruments typically sees gold and silver prices move inversely to bond yields and dollar strength, making current market conditions particularly challenging for bullion investors.
Global economic indicators also played a significant role, with mixed signals from major economies affecting investor risk appetite. The uncertainty surrounding inflation trajectories and central bank policies across developed markets has created a cautious trading environment where safe-haven assets face unexpected pressure.
Market Outlook and Analyst Perspectives
Financial experts suggest that the precious metals market may continue facing volatility in the near term as traders reassess their positions based on incoming economic data. The focus remains squarely on upcoming US employment figures and inflation reports, which could significantly influence Federal Reserve policy decisions.
Technical analysis indicates that gold needs to maintain support levels around $2,015 per ounce to prevent further declines, while silver faces resistance near the $22.60 mark. Domestic markets are expected to track international movements closely, with the rupee-dollar exchange rate providing additional directional cues for MCX-traded contracts.
Looking ahead, market participants are advised to monitor central bank communications, particularly from the Federal Reserve and European Central Bank, for clearer signals about future monetary policy direction. The timing and pace of potential rate cuts will likely determine the medium-term trajectory for gold and silver prices globally.
