Gold, silver futures tumble up to 8%: Here’s why bullion is under pressure

Gold and silver futures on MCX fell up to 8 per cent in Monday's trade, even as the West Asia crisis showed no signs of easing. Gold futures for April 2 delivery were quoting Rs 8,143 per 10 grams, or 5.64 per cent, lower at Rs 1,36,349 per 10 grams. Silver futures were down Rs 17,665, or 7.79 per cent, at Rs 2,09,107 per kg.

Gold and silver prices have usually risen amid geopolitical tensions but this time they are falling faster than ninepins, said market veteran Arun Kejriwal. "To be honest, I have not seen such diversity and divergences in my 30-35 years of experience. You do get nervous watching what is happening," Kejriwal told Business Today. 

The safe-haven gold has fallen every week since the US-Israel strikes on Iran last month, pressured by rising Treasury yields, a stronger dollar, and profit-taking, as investors liquidated positions to offset losses elsewhere, said Axis Securities. 

The brokerage said the US military deployment has been expanded in the region, prompting traders to assign a 50 per cent probability of a Federal Reserve rate hike by October, while also pricing in at least three rate hikes each from the European Central Bank and the Bank of England in 2026. 

ICICI Direct said the US Dollar Index has reversed its losses and reclaimed 99.50 mark on safe haven demand. Ongoing war in Iran has boosted demand for the dollar as a safe haven, it said.

Dollar index usually has inverse relation with gold and equities. The index measures dollar against a basket of six major world currencies, stood at 99.79, up 0.14 per cent. It stood at 95.55 level at the beginning on Iran war.

"In addition, higher treasury yields also supported the dollar. It also got support from hawkish Fed comments, when Fed Chair Powell said there will be no Fed rate cut unless there is progress on inflation," ICICI Direct said.

A sharp and unusual selloff in precious metals is indicating growing stress across global financial markets as the Iran war persists, according to analysis by The Kobeissi Letter. It added that gold has officially entered a bear market, falling roughly 22 per cent from its record high.

Kejriwal said the Iran war is into its fourth week and the 'aggressor' US is making different statements at different time of the day. "He talks of winding down the war, he talks of having obliterated Iran and what not. And we have a defiant Goliath fighting tooth and nail and hurting America where it hurts the most," he said citing the US President Donald Trump's comments and Iran's reaction. 
     
Kejriwal noted that Iran is attacking the US bases in the West Asia and it is creating panic in the region. He cited Dubai airport attack a few weeks ago and noted real estate prices in the city crashed 30-40 per cent and have not recovered since. He said crude oil prices also seem to be rising. 

MCX gold tumbled over 8 per cent last week, settling below the 9-week EMA on the weekly chart for the first time since June 25, which Axis Securities said wsas a bearish signal for prices. Additionally, the momentum indicator RSI slipped below the 60 level, suggesting strong downside momentum. MCX silver, on the other hand extended its three-week losing streak, falling more than 12 per cent last week.

"On the weekly chart, it is trading below the 9-week EMA, while the RSI also remains under 60, indicating a bearish undertone for prices," Axis Securities said.

In the case of gold, Ponmudi R, CEO at Enrich Money said Rs 1,39,000–1,40,000 remained the immediate resistance band. On the downside, support is placed at Rs 1,34,000–1,35,000. "A breakdown below this level could accelerate profit booking toward Rs 1,30,000.  Overall, the near-term bias is turning negative, with prices trading below key moving averages and volatility expected to remain elevated due to macro uncertainty," he said.

Ponmudi said MCX Silver opened sharply lower and is currently trading within the Rs 2,12,000–2,14,000 support zone, indicating continued selling pressure at higher levels. 

"On the upside, Rs 2,18,000–2,20,000 remains the immediate resistance. A breakout above Rs 2,20,000 could lead to a recovery toward Rs 2,24,000–2,28,000. On the downside, a breakdown below Rs 2,12,000 could accelerate losses toward Rs 2,08,000–2,10,000, with further support near Rs 2,00,000–2,05,000," he said.