Gold, silver futures drop 3% after trading resumes on MCX

Gold futures with February and April expiries fell to Rs 1,19,059 per 10 grams and Rs 1,20,500 per 10 grams respectively. These contracts too have fallen around 11 percent in a week after hitting fresh lifetime highs. Domestic prices of gold also fell, with 10 grams of 24 carat gold being priced at Rs 1,22,460 on an average, according to data on Good Returns.

Silver futures also dropped nearly 3 percent each, with the contracts with December expiry falling to Rs 1,39,899 per kilogram.

What lies ahead?

According to Ross Maxwell, Global Strategy Lead at VT Markets, long-term fundamentals for gold remain broadly supportive despite near-term cooling. He points out that gold is still up over 50 percent this year, due to factors like a weaker US dollar, strong central bank buying, expectations of lower interest rates, and persistent geopolitical tensions.

Maxwell however cautions that a firmer dollar or a rise in real yields could trigger a 5–10 percent short-term correction, especially as gold now trades in that crucial $4,000–$4,400 per ounce psychological zone.

Meanwhile, Jateen Trivedi from LKP Securities, says the ongoing US government shutdown and uncertainty around trade negotiations are expected to keep sentiment cautious. In the near term, he expects gold prices to remain volatile in a range of Rs 1,18,000–Rs 1,25,500, with a slightly negative bias — at least until there is more clarity on these macro developments.

Adding to that, Tejas Shigrekar, Chief Technical Research Analyst for Commodities and Currencies at Angel One, anticipates further downside in gold prices in November and December. That is because seasonal demand is tapering off after the festive period.

He also notes that investor sentiment has shifted. Traders are now increasing exposure to put options, which suggests they are positioning for continued weakness in the coming months.

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Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.