Gold and silver prices plunged sharply on Saturday, January 31, on the Multi Commodity Exchange (MCX), with silver falling ₹1.10 lakh to ₹2.91 lakh per kilogram and gold dropping ₹20,000 to ₹1.49 lakh per 10 grams, as profit booking and rising margins exerted pressure on the markets.
Silver, which was trading at ₹4.01 lakh per kilogram on January 29, declined nearly 27 per cent in a single day. Gold, which had reached a high of ₹1.69 lakh per 10 grams, fell 12 per cent. Analysts attributed the slump to large-scale profit booking after record price levels were reached in recent days.
Physical demand also weakened, adding to the downward trend. Investors and industrial users reduced purchases, reflecting concerns over affordability and future price direction. The decline in physical demand coincided with a surge in margin requirements on commodity futures, amplifying selling pressure.
According to SEBI-registered commodity expert Anuj Gupta, the Chicago Mercantile Exchange (CME) increased margin requirements on gold and silver. “The margin on gold has been raised from 6 per cent to 8 per cent, and on silver from 11 per cent to 15 per cent. This is expected to keep prices under pressure,” Gupta said.
Also read: Gold, silver slip after record-breaking rally
Higher margins compel traders to deposit more capital for positions already held. Those unable to meet additional margin calls often liquidate holdings, triggering a cascade of selling. This effect was visible in both the futures and physical markets on Thursday.
In the bullion market, silver declined by ₹40,638 to ₹3,39,350 per kilogram, while 10 grams of 24-carat gold fell ₹9,545 to ₹1,65,795, according to the India Bullion and Jewellers Association (IBJA). Unlike the futures market, which operates until midnight with prices fluctuating every second, the bullion market closes at 5 p.m., resulting in smaller intraday swings.
Traders and investors are advised to monitor margins and demand trends closely, as market volatility is expected to continue. Profit booking and rising margins are likely to remain key drivers in the near term.
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