Are Silver and Gold Signaling a Reversal After a Major Decline?
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Synopsis
As precious metals seek a reversal in the domestic market after a significant retreat, gold and silver are navigating turbulent waters. With geopolitical tensions and market fluctuations at play, investors are keenly watching how these commodities will respond amidst changing dynamics.
Key Takeaways
- Gold prices are experiencing a slight recovery after a sharp decline.
- Silver shows significant price jumps, suggesting volatility.
- Geopolitical tensions continue to drive demand for safe havens.
- Market fluctuations are influenced by trading volumes and margin requirements.
- Investors should remain vigilant regarding inventory levels of precious metals.
Mumbai, Dec 30 (NationPress) Precious metals have begun to show signs of reversal in the domestic market on Tuesday after experiencing a significant decline, with both gold and silver retreating from their record highs in the previous session.
MCX gold February futures increased by 0.59 percent to Rs 1,35,744 per 10 grams, while MCX silver March futures surged by 4.08 percent to Rs 2,33,700 per kg.
In international markets, spot gold fell 4.5 percent on Monday to $4,330.79 an ounce, while US gold futures for February delivery closed 4.6 percent lower at $4,343.60.
This pullback followed an earlier spike that saw gold reach $4,584 per troy ounce and silver rise to $82.67 per ounce before both metals were unable to sustain their gains. Analysts have attributed this retreat mainly to overextended long positions, an increase in margin requirements by the Chicago Mercantile Exchange (CME), and low holiday trading volume that intensified intraday fluctuations.
Despite the pullback, the safe haven demand for these metals remains strong as Russia's President Vladimir Putin informed US President Donald Trump that Russia would reassess its stance in peace talks following a Ukrainian drone attack on a Russian presidential residence.
Constrained inventories and rapidly diminishing liquidity are bolstering the rise of silver. Analysts pointed out that silver lacks the reserves gold possesses, as the London gold market is backed by approximately $700 billion in bullion available for lending during liquidity crises.
“The demand for safe havens, influenced by tensions between the US and Venezuela and renewed conflicts between Russia and Ukraine, could provide support at lower levels. Gold has support around Rs 1,33,550-Rs 1,31,710 while facing resistance at Rs 1,36,850-Rs 1,38,670. Silver has support levels at Rs 2,19,150-Rs 2,17,780 and resistance at Rs 2,26,810-Rs 2,28,970,” stated Rahul Kalantri, VP Commodities at Mehta Equities Ltd.
A recent analysis from Motilal Oswal Financial Services Ltd. highlighted that ongoing inventory reductions across major global hubs, diminishing arbitrage between Shanghai and COMEX, coupled with persistent delivery pressures, have revealed the limited availability of deliverable silver.
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Point of View
It is crucial to observe market movements closely. The recent fluctuations in gold and silver, highlighted by geopolitical tensions, remind investors of the importance of staying informed. Our commitment at NationPress is to provide you with unbiased, accurate information, helping you navigate these changes effectively.
NationPress
02/01/2026
Frequently Asked Questions
What caused the recent decline in gold and silver prices?
The decline was largely due to overextended long positions, increased margin requirements by the CME, and low trading volumes during the holiday season.
What are the current support and resistance levels for gold?
Gold has support at Rs 1,33,550-Rs 1,31,710 and resistance at Rs 1,36,850-Rs 1,38,670.
How does geopolitical tension influence precious metal prices?
Geopolitical tensions often drive safe haven demand for precious metals, leading to price fluctuations as investors seek stability.
What factors are contributing to the silver market's performance?
Factors include tight inventories, limited deliverable silver, and market reactions to geopolitical events.
What should investors watch for in the precious metals market?
Investors should monitor geopolitical developments, market trends, and inventory levels that can significantly impact prices.
