Gold and Silver prices extend fall amid US-Iran optimism — Is this the right time to buy dip?

Gold and silver extended their decline on Tuesday amid optimism over a possible US-Iran deal and continued strength in the dollar, prompting investors to reassess whether this is the right time to buy precious metals.

In the international markets, gold April futures settled at USD 4,905.90 per troy ounce, down 2.17 per cent. Silver March futures closed at USD 73.54 per troy ounce, registering a decline of 3.94 per cent.

Domestic markets also witnessed weakness. Gold April futures on the Multi-Commodity Exchange (MCX) settled at Rs 1,51,418 per 10 grams, down 2.16 per cent. Silver March futures ended at Rs 2,28,783 per kilogram, falling 4.63 per cent.

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Dollar strength, easing safe-haven demand weigh on prices

Market participants said easing safe-haven demand, positive developments in US-Iran talks, and a stronger dollar weighed on bullion prices. The US and Iran held a second round of talks in Geneva on Tuesday. Statements from both sides indicated progress in discussions, which reduced immediate geopolitical concerns. This led to a decline in demand for safe-haven assets such as gold and silver.

The dollar index moved above the 97 mark, making dollar-priced bullion more expensive for holders of other currencies and limiting gains in precious metals. Analysts said the firm dollar continued to exert pressure on gold and silver.

Holidays in China and several other Asian countries for the Lunar New Year resulted in thin trading volumes. Market experts said reduced participation and lower liquidity contributed to volatility in global precious metal markets. Some panic selling was also seen during the session.

Mixed US data clouds rate cut outlook

Recent US economic data presented mixed signals regarding the outlook for interest rate cuts by the Federal Reserve. Data showed that US consumer prices rose less than expected in January. However, job growth accelerated during the same month.

Federal Reserve Bank of Chicago President Austan Goolsbee said interest rates could move lower in the future, but added that services inflation remained high. Market participants are closely tracking US economic indicators and comments from Federal Reserve officials for clarity on the interest rate trajectory.

Experts advise caution amid volatility

Manoj Kumar Jain, a commodities expert, said investors should remain cautious in the current environment. “Investors should be cautious at the moment. Prices are volatile due to developments in US-Iran talks and a strong dollar. It may not be the right time to take new positions in gold and silver this week,” he said.

He further said that volatility is likely to persist due to geopolitical developments, movements in the dollar index, and upcoming US economic data. “Investors may wait for a clearer trend before entering the market. Volatility is expected to continue due to US-Iran negotiations, the dollar index, and key US economic data this week,” Jain added.

Key support and resistance levels

According to technical levels, gold is expected to find support between USD 4,880 and USD 4,824 per troy ounce, while resistance is seen at USD 4,955 to USD 5,000 per troy ounce. Silver has support in the USD 71.20 to USD 68.80 range and resistance at USD 76.00 to USD 78.40 per troy ounce.

On the MCX, gold has support at Rs 1,49,800 to Rs 1,47,700 per 10 grams and resistance at Rs 1,53,150 to Rs 1,55,500. Silver has support at Rs 2,24,400 to Rs 2,18,800 per kilogram and resistance at Rs 2,32,200 to Rs 2,36,000.

Jain added that gold and silver are likely to remain volatile in the near term, with price movements driven by geopolitical developments, currency fluctuations, and macroeconomic data.