Precious Metal Rates: MCX silver hits lower circuit, gold tumbles by Rs 5,000 amid volatility

The extended fall in both precious metals comes a day after silver made a sharp U-turn in global trade, raising concerns about whether the white metal’s recent rally was too much, too soon. Analysts say that price swings in domestic gold and silver futures may continue this week amid currency fluctuations, bond yield moves and Middle East geopolitical tensions.

MCX silver locked in 6.0% lower circuit

Early in the evening session, after the market remained shut for the morning session for Holi, MCX silver futures were locked in the 6.0 per cent lower circuit limit. That came a day after the white metal retreated sharply from the green in the previous day's trade, even as equity benchmarks tumbled about 1.25 per cent in some respite after falling more than 2p per cent in intraday deals. Typically, equities and precious metals share an inverse relationship, with investors flocking to safer bets when equities turn unfavourable, and vice versa. The white metal contract had already seen a swing of 7.6 per cent from intraday highs in the previous session, underscoring the extreme volatility gripping the segment. On Tuesday, COMEX silver futures were trading 6.8 per cent lower at $82.8 an ounce at the last count, while the gold contract was down 2.0 per cent at $5,208 an ounce. The move mirrors weakness seen on COMEX, where silver had fallen sharply to $88-odd levels in the previous session.

Gold cracks by Rs 5,000

Gold -- which had shown relative resilience earlier -- also succumbed to heavy selling pressure. The contract fell by nearly Rs 5,000, reversing part of Monday’s 2.7 per cent gain. The yellow metal had moved in a wide Rs 4,780 range on Monday, between Rs 1,65,100 and Rs 1,69,880. Tuesday’s sharp decline signals profit-booking and possible liquidation amid cross-asset volatility. What triggered the intensified sell-off?

• The latest leg of the fall builds on factors already weighing on precious metals:
• Weak industrial demand signals, particularly from China, a key consumer of silver
• A firm US dollar, which makes commodities priced in the currency more expensive for global buyers
• Rising US bond yields, reducing the appeal of non-yielding assets like gold and silver
• Expectations of a hawkish stance from the US Federal Reserve under its next Chair
• Aggressive profit-booking after last year’s near one-sided rally

On Monday, a broad-based sell-off on Dalal Street – linked to the ongoing Middle East tensions – had eroded Rs 6.6 lakh crore in investor wealth. Typically, such equity stress supports safe-haven buying in gold and silver. However, the failure of silver to attract defensive flows suggests positioning had turned stretched. The country's financial markets remained shut the next day for Holi.

Market Signals | Key levels to track in gold and silver futures

In the previous session, Manoj Kumar Jain of Prithvi Finmart had flagged high volatility in both metals, citing wild moves in the dollar index, Israel-Iran war jitters and upcoming US jobs data. He had identified: Gold Support: Rs 1,60,600-1,58,800 Resistance: Rs 1,64,400-1,67,000 Silver Support: Rs 2,78,000-2,71,000 Resistance: Rs 2,92,000-3,04,000 With silver now breaching the upper end of that support band and hitting the lower circuit, traders will closely monitor whether deeper supports around Rs 2,71,000 hold on a closing basis.