Gold and silver prices continued to fall on Monday. Higher margin requirements are set to come into effect on the Chicago Mercantile Exchange (CME). Higher margins have made trading more expensive, forcing many investors to reduce their positions, leading to increased selling pressure in precious metals.

In the domestic market, MCX gold February futures fell 1.77 percent during the day to ₹1,45,132 per 10 grams. Meanwhile, MCX silver March futures fell 6.88 percent to ₹2,47,386 per kilogram.

Why Trump's Decision Was the Reason

According to analysts, the market decline accelerated as discussions about a possible change in the US Fed Chair intensified, with Kevin Warsh's name emerging. Warsh is considered more hawkish on interest rates than previous Fed chairs. This raised fears of higher interest rates in the US, which generally impacted gold and silver prices.

Why Global Demand Declined

The decline is being attributed to a strong US dollar, rising US Treasury yields, and positive US inflation data such as the Producer Price Index (PPI) and Core PPI. A strong dollar makes gold and silver more expensive for buyers using other currencies, reducing global demand.

Apart from these reasons, the budget did not make any changes to import duties on gold and silver. This reduced price advantages for the Indian market and weakened domestic premiums.

Expert Outlook

Analysts said that gold could find support around USD 4,510 in global markets this week, while silver could find support near USD 68. In the Indian market, gold has support between Rs 1,39,650 and Rs 1,36,310, while resistance is seen at Rs 1,48,850 and Rs 1,50,950.

Silver has support near ₹2,48,810 and ₹2,37,170, and resistance at ₹2,78,810 and ₹2,95,470. The long-term outlook remains positive.

Despite the current decline, experts said the long-term trend for gold remains positive due to continued central bank buying and safe-haven demand. Silver is also benefiting from strong industrial demand and limited supply.

However, a report by Whiteoak Capital Mutual Fund advised investors to reduce their investments in precious metals, especially silver, as prices have risen sharply and are significantly overvalued compared to historical levels.

While short-term volatility may persist, experts believe the decline could be a buying opportunity for long-term investors.