Gold and silver prices saw a sharp retreat from the day’s highs during Monday’s session, December 29, as the prolonged rally appeared to trigger profit booking, while easing geopolitical tensions and China’s export restrictions also fueled the decline.
February gold contracts fell around 2.10% or 4,273 from the day’s high of 1,40,444 to reach the day’s low of 1,36,171 per 10 grams.
Silver prices, even more corrected sharply by over 10% as the metal took a roller-coaster ride on Monday after crossing the 2.5 lakh mark for the first time.
After gaining 16,000 per kg on Friday, silver rates extended their record-breaking run into Monday as well. Contracts for March delivery gained another 14,400 per kg to cross the 2.5 lakh mark for the first time, reaching 254,174.
However, prices later retreated sharply, crashing from 28,674 per kg or 10.3% to hit the day’s low of 2,25,500.
Prices rose 31,348 last week, which came just two months after the London silver market suffered a full-blown squeeze, as flows into exchange-traded funds and exports to India eroded inventories that were already critically low.
Export restrictions by China
China, the world’s second-largest producer of silver, is slated to restrict silver exports from January 1 through a state licensing mechanism. Although the country ranks among the top three global producers of silver—largely as a by-product of industrial metals—it is also the world’s largest consumer and therefore not a major exporter.
Over the weekend, Elon Musk highlighted the growing investor frenzy around precious metals, replying to a tweet on Chinese export restrictions by saying,
Easing geopolitical tensions
On the geopolitical front, US President Donald Trump said on Sunday that he and Ukrainian President Volodymyr Zelenskiy were “getting a lot closer, maybe very close” to an agreement to end the war in Ukraine.
Margin hike by CME adds pressure
US-based CME Group, which operates major derivatives exchanges such as CME, COMEX, CBOT, and NYMEX, on Friday evening raised the margin required to trade to $25,000 per contract, effective Monday, from $20,000.
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