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Gold, Silver Prices Tumble as US Fed Fears and CME Margin Hike Bite

Gold and silver prices continued their decline, pressured by an imminent hike in CME margin requirements and a stronger US dollar. The sell-off intensified on fears that US President Donald Trump's selection of Kevin Warsh as Fed Chair could lead to more aggressive interest rate policy. Analysts note domestic premiums suffered as India's Union Budget kept import duty unchanged, though the broader structural outlook for both metals remains constructive. Support and resistance levels are identified for both metals as markets digest the recent vertical rally.

Key Points: Gold, Silver Decline on CME Margin Hike & Fed Policy Fears

  • CME margin hike pressures prices
  • Stronger dollar, yields add to decline
  • Trump's Fed pick sparks investor worry
  • Domestic premium hit by unchanged import duty
2 min read

Gold, silver continue to decline as CME margin requirements hike set to take effect

Gold and silver prices extend losses amid CME margin requirement hikes, a stronger dollar, and concerns over aggressive US Fed policy under Kevin Warsh.

"Gold has support at Rs 1,39,650 to Rs 1,36,310 zone while resistance at Rs 1,48,850 and Rs 1,50,950. - Analyst"

Mumbai, Feb 2

Gold and silver extended their decline on Monday, as hike in margin requirements are set to take effect on Chicago Merchantile Exchange in the US.

MCX gold February futures fell 1.77 per cent to Rs 1,45,132 per 10 grams on an intra-day basis. Meanwhile MCX silver March futures dipped 6.88 per cent to Rs 2,47,386 per kg.

Analysts said the free fall of gold and silver from their record highs started after the US President Donald Trump selected Kevin Warsh as the next US Fed Chairman. Investors reacted negatively because Warsh is considered more aggressive on interest-rate policy than earlier chairs, they added.

The decline was further supported by a stronger U.S. dollar, higher Treasury yields, and upbeat US inflation data (PPI and core PPI). As import duty was kept unchanged in the Union Budget the domestic premium in bullion suffered, said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

In international markets silver could find support near $68, while gold may hold around $4,510 this week, analysts forecasted. Spot gold recovered considerably after dropping 4 per cent in early morning session on Monday, during the Asian trading hours.

"Gold has support at Rs 1,39,650 to Rs 1,36,310 zone while resistance at Rs 1,48,850 and Rs 1,50,950. Silver has support at Rs 2,48,810 and Rs 2,37,170 while resistance at Rs 2,78,810 and Rs 2,95,470," the analyst said.

According to them, the broader market trend for COMEX gold remains constructive, even as the recent vertical rally pushed momentum indicators into overbought territory, leading to heat-driven profit booking and mild price digestion from elevated levels.

Structural supply deficits and steady industrial demand continue to underpin the bullish bias in silver. Persistent safe-haven demand, steady central-bank accumulation, and expectations of accommodative global monetary conditions continue to underpin prices of yellow metal.

A recent report from WhiteOak Capital Mutual Fund said that investors should trim precious metals allocation back to a safe‑haven allocation level, especially on the silver as its valuation had reached the most over-extended level relative to historical periods.

- IANS

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Reader Comments

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Priyanka N
Silver down nearly 7%! 😳 That's a massive move. I was about to book some profits on my silver ETFs last week, now regretting it. The US Fed chair speculation seems to be driving everything. Our local markets just react to global cues.
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Aman W
Good analysis. The unchanged import duty in the budget was a key factor missed by many. It killed the domestic premium. Government wants to discourage gold imports to help the current account deficit, but the common man's savings are affected.
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Sarah B
Interesting to see how interconnected markets are. A margin hike in Chicago affects prices in Mumbai. The support and resistance levels given are very useful for traders. Time to be cautious and not chase the rally.
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Karthik V
With the wedding season approaching, many families will be watching these prices closely. A fall is welcome news for them, even if investors are panicking. Physical demand might put a floor under the prices soon.
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Vikram M
Respectfully, the article focuses heavily on US factors. What about domestic demand and RBI's gold reserves policy? That also plays a big role. The long-term structural story for silver, with its industrial use in solar panels etc., is still very strong.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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