Gold and silver prices continued their sharp downward trend for the third consecutive day on Monday, weighed down by heavy profit booking by investors, which has put significant pressure on precious metal prices. On the Multi Commodity Exchange (MCX), gold for April 2 delivery was trading at Rs 1,38,256 per 10 grams, down nearly 3 per cent, or about Rs 4,000. Meanwhile, silver for March 5 delivery slipped sharply by around 6 per cent, or nearly Rs 16,000, to trade at Rs 2,49,713 per kg.

Sharp decline in gold and silver prices
The weakness was mirrored in international markets as well. Around 10 am, gold was trading at $4,689.43 per ounce, down 4.20 per cent (about $206), while silver fell 6.51 per cent (around $5.56) to $79.76 per ounce.According to CME, margin requirements for gold futures will be raised across all risk categories. For non-heightened risk positions, margins will increase from 6 per cent to 8 per cent of contract value, while for heightened risk positions, margins will rise from 6.6 per cent to 8.8 per cent.

Silver margins raised sharply
For silver futures, margins for non-heightened risk positions will be increased from 11 per cent to 15 per cent, while margins for heightened risk positions will go up from 12.1 per cent to 16.5 per cent.

Experts said the higher margin requirements will force traders to deploy more capital in the derivatives segment, potentially curbing speculative activity and reducing liquidity. 

The combination of profit booking, tighter margin norms, and weak global cues is being seen as the key reason behind the steep fall in gold and silver prices.