Gold, silver rates today: Gold-silver ratio jumps, will this rally sustain?

Gold, silver rates today: Following sharp selling on Friday and Monday, gold and silver prices have been on an uptrend over the last two sessions. Gold and silver rates today extended their Tuesday gains in the domestic and international markets. The COMEX gold rate today reclaimed the psychological $5,000 mark, and the precious yellow metal has been sustaining above this level since morning. The COMEX silver rate today opened upside and has been sustaining above $85/oz mark since morning. This has brought the gold-silver ratio today to around 58, down from a record 42 on Monday.

Gold-silver ratio: What does it mean for investors?

What the gold-silver ratio means for investors, NS Ramaswamy, Head of Research at Ventura Securities, said, "Silver and gold could witness continued upside rallies, but these gold-silver ratio levels serve as a pivot point to rotate holdings from silver into gold, as gold is relatively cheaper when compared at GSR levels of 60 or below. The "mean reversion" expected the ratio to rise again from 42 levels, which indeed happened. The outcome was with a sacrifice of Silver’s price crash, and now it’s time for Gold to outperform Silver in the coming months."

Gold, silver crash: What triggered the sell-off?

Highlighting the reasons for the gold, silver price crash, Kaynat Chainwala, AVP — Commodity Research at Kotak Securities, said, “Spot gold plunged more than 4.5% on Tuesday, closing below $4,700/oz, while silver tumbled around 7% to settle near $79.3. The selloff extended losses from last Friday, driven by a rebound in the U.S. dollar and a shift toward a more hawkish Federal Reserve outlook following the nomination of Kevin Warsh, widely viewed as an inflation hawk, as the next Fed Chair."

The Kotak Securities expert said that some additional pressure came from firmer US Treasury yields after US manufacturing data surprised to the upside. The ISM manufacturing index jumped to 52.6 in January from 47.9, returning to expansion territory after 26 consecutive months of contraction. Stronger data prompted traders to scale back expectations for Federal Reserve rate cuts this year.

“The selloff was exacerbated by higher margin requirements and growing expectations that policy easing will be delayed until Jerome Powell’s term ends in May, with a perceived hawkish candidate set to take the helm,” Kaynat Chainwala added.

Gold, silver rates today: Why are precious metals rising?

Highlighting the reasons that are fueling gold, silver rates today, Rahul Kalantri, VP Commodities at Mehta Equities, said, “Gold and silver prices today rebounded from their recent lows, climbing back above $5,000 and $87 respectively, after two consecutive sessions of sharp selling. Markets have largely absorbed the nomination of Kevin Warsh as the new Fed Chairman. Safe-haven buying strengthened amid rising geopolitical tensions, after U.S. forces shot down an Iranian drone, although diplomatic talks are still expected to continue. Support also came from a partial US government shutdown and profit-taking in the dollar index from its highs. However, a firmer rupee capped gains for precious metals in domestic markets.”

Silver, gold rates today: Key levels to watch!

“Gold rate today has support at $4,855 and $4,775 per ounce, while resistance is at $5060 and $5150. Silver rate today has support at $79.80 and $74.75, while resistance is at $89.15 and $94.80. In INR, gold rate today has support at ₹1,47,650 to ₹1,45,310 per 10 gm, while resistance is at ₹1,52,850 and ₹1,55,950. Silver rate today has support at ₹2,59,810 and ₹2,52,170, while resistance is at ₹2,74,810 nd ₹2,80,470,” said Rahul Kalantri of Mwehta Equities.

Gold, silver rate today: Will rally sustain?

Whether it is a relief rally or gold and silver prices would climb to a new peak in this bounceback, Amit Goel, Chief Global Strategist at PACE 360, said, “I personally believe that gold and silver prices have topped out last Friday morning when both the precious metals climbed to a new peak before sharp selling triggered. However, if gold rates today or in the coming one to two sessions break above $5,400 per ounce on a closing basis, we can expect the precious yellow metal to climb to a new peak. Likewise, if the silver rate today or in the next one to two sessions breaks above $95 per ounce mark on a closing basis, then we can expect the precious white metal to hit a new peak, provided it remains above $95 per ounce levels without coming below this psychological mark.”

Do gold and silver rates breaking above the given resistance on a closing basis mean a sustained rally in the precious metals? Amit Goel of PACE 360 said, “This rally is short-lived. Those who held positions at higher levels on Friday morning and are still holding them are advised to book their profit/loss on this rebound and exit. These rebounds should be treated as dead-cat bounces, where the fall will be greater than the rebound.”

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.