Gold prices fell sharply on the Multi Commodity Exchange (MCX) on Monday, February 2, as traders booked profits amid weak global cues and higher margin requirements announced by CME Group for precious metals.
(CME stands for Chicago Mercantile Exchange. CME Group is the world's leading derivatives marketplace, enabling traders to buy and sell futures and options contracts across major asset classes; it operates as an exchange operator, uniting four major trading floors—CME, CBOT, NYMEX, and COMEX—to provide global benchmarks and risk management tools for investors.)
February futures dropped nearly ₹4,000, or about 3 percent, to ₹1,38,256 per 10 grams in early trade. Silver saw a steeper fall, with MCX silver March futures tumbling nearly ₹16,000, or around 6 percent, to ₹2,49,713 per kg.
The decline comes after a volatile run in precious metals over the past few sessions.
International gold prices also weakened, with US gold futures for April slipping to $4,605.49 per troy ounce. Market sentiment turned cautious after CME Group announced an increase in margin requirements for precious metals contracts, effective shortly. CME Group said margins would be raised across risk categories.
According to CME:
Gold futures margins for non-heightened risk positions will rise to 8 percent of contract value from 6 percent
For heightened risk positions, margins will increase to 8.8 percent from 6.6 percent
Silver futures margins for non-heightened risk positions will be raised to 15 percent from 11 percent
For heightened risk positions, margins will go up to 16.5 percent from 12.1 percent
Higher margins increase trading costs in the derivatives segment, which analysts say could curb speculative activity and reduce liquidity in the short term.
Market sentiment has also been impacted by developments in the US, particularly reports that President Donald Trump is considering Kevin Warsh as his nominee for Federal Reserve chair.
According to Jigar Trivedi, senior research analyst at IndusInd Securities, the recent sell-off was triggered by concerns that Warsh is viewed as more hawkish on interest rates.
Trivedi said MCX gold February futures could slip further towards ₹1,39,000 per 10 grams, as global trends remain weak.
Rahul Kalantri of Mehta Equities, said gold and silver prices fell sharply after the announcement, as investors reacted to the prospect of tighter monetary policy.
“The decline was further supported by a stronger US dollar, higher Treasury yields and firm US inflation data, including PPI and core PPI,” he said.
Gold (MCX)
Support: ₹1,39,650 and ₹1,36,310
Resistance: ₹1,48,850 and ₹1,50,950
Silver (MCX)
Support: ₹2,48,810 and ₹2,37,170
Resistance: ₹2,78,810 and ₹2,95,470
Analysts expect precious metals to remain volatile in the near term, tracking global interest rate expectations, currency movements and changes in derivatives market regulations.
