Gold and silver falling from record highs in the earlier session.
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MUMBAI — Precious metals showed signs of reversal in domestic market on Tuesday after it retreated sharply, with gold and silver falling from record highs in the earlier session.
MCX gold February futures rose 0.59 per cent to INR 1,35,744 per 10 grams, while MCX silver March futures jumped 4.08 per cent to INR 2,33,700 per kg.
In global markets, spot gold fell 4.5 per cent on Monday to $4,330.79 an ounce, while US gold futures for February delivery settled 4.6 per cent lower at $4,343.60.
The pullback followed an early surge that saw gold touch $4,584 per troy ounce and silver climbed to $82.67 per ounce before both metals failed to hold gains. Analysts attributed the retreat largely to stretched long positions, a hike in margin requirements by the Chicago Mercantile Exchange (CME) and thin holiday trading that amplified intraday swings.
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Safe haven demand of the metals still holds as Russia's President Vladimir Putin told US President Donald Trump that Russia would review its position in peace negotiations after "a Ukrainian drone attack on a Russian presidential residence".
Tighter inventories and liquidity that can evaporate quickly is supporting the rally of silver. Silver does not have a reserve like gold as the London gold market is underpinned by around $700 billion of bullion that can be lent out in the event of a liquidity squeeze, analysts noted.
"Safe-haven demand stemming from US-Venezuela tensions and renewed Russia-Ukraine hostilities could lend support at lower levels. Gold has support at INR 1,33,550-INR 1,31,710 zone while resistance at INR 1,36,850-INR 1,38,670 zone. Silver has support at INR 2,19,150-INR 2,17,780 while resistance at INR 2,26,810-INR 2,28,970 zones," said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
A recent report from Motilal Oswal Financial Services Ltd. said that persistent inventory drawdowns across key global hubs, weakening arbitrage between Shanghai and COMEX, and repeated delivery pressures have exposed the limited availability of deliverable silver.