The recent plunge in gold and silver prices has taken investors by surprise, especially following a vigorous bull run that saw prices reach unprecedented highs. Analysts suggest that while near-term corrections may linger, the fundamental drivers supporting these precious metals remain robust.
Last week, gold futures with an April expiry on the Multi Commodity Exchange (MCX) experienced a staggering decline of approximately 9 percent, settling at Rs 1,67,406 per 10 grams on Friday. This sharp drop followed the contracts hitting a record high of Rs 1,93,096 per 10 grams just the day before. In total, this reflects a dramatic fall of about 13 percent, or Rs 25,690 per 10 grams, in a single day.
Similarly, silver futures for March expiry plummeted nearly 17 percent to Rs 3,32,002 per kilogram, marking a significant decline of 21 percent, or Rs 88,046 per kilogram, after reaching a peak of Rs 4,20,048 per kilogram. On the global stage, spot silver on COMEX crashed around 30 percent over two days, closing at $85.250 per ounce, while spot gold fell about 13 percent to wind up at $4,879.60 per ounce.
The sharp correction has been attributed to aggressive profit-booking and a stronger U.S. dollar, spurred by U.S. President Donald Trump’s decision to appoint hawkish former Federal Reserve Governor Kevin Warsh as the new central bank head. This move has led to fears of tighter monetary policy, causing further strain on metal prices.
Analysts, including Nikunj Saraf, CEO of Choice Wealth, have indicated that the sell-off is a typical reaction to profit-taking after record highs. Saraf emphasized the importance of maintaining a diversified portfolio and avoiding panic selling in a time of volatility, while asserting that long-term bullish sentiments for gold and silver still hold strong.
Moreover, silver has shown exceptional performance over the past year, driven by a combination of safe-haven demand, tight supply, and increasing industrial consumption, particularly in sectors like solar, electronics, and manufacturing—an essential aspect of India’s economic growth. Rajkumar Subramanian, Head of Product & Family Office at PL Wealth, noted that despite its potential, silver is historically more volatile than gold, necessitating careful investment strategies.
Hareesh V, Head of Commodity Research at Geojit Investments, warned that the current precious metal market appears overbought, increasing the chance of short-term corrections. Stabilizing geopolitical conditions, a firmer dollar, decreased investor risk appetite, or improvements in mine outputs could alleviate some of the existing upward pressure on prices.
As market dynamics unfold, investors are advised to keep a close watch on market trends and seek counsel from certified experts before making investment decisions.
