Key points:
- Silver crashed nearly 15 percent on MCX, gold fell close to 9 percent intraday
- Sharp fall followed record highs hit just a day earlier
- Profit booking after January’s historic rally triggered heavy selling
- Stronger dollar and US Fed uncertainty added to market pressure
- Experts remain divided on whether the fall is a buying opportunity
Friday turned out to be one of the worst trading sessions in recent years for precious metals on the Multi-Commodity Exchange. Gold and silver witnessed a steep sell-off, wiping out a significant portion of their recent gains. By market close around 3:30 PM, silver had plunged nearly 15 percent, while gold was down close to 9 percent from its intraday highs.
Silver was trading around ₹3,39,910 per kilogram, registering a massive fall of nearly ₹60,000. Gold also slipped sharply by more than ₹14,000, dragging prices down to around ₹1,55,000 per 10 grams on MCX.
Why did gold and silver fall so sharply?
The historic fall came as investors rushed to book profits after an extraordinary rally in January. Silver had surged nearly 56 percent last month, marking its strongest monthly performance on record. Gold, meanwhile, had jumped more than 20 percent in dollar terms, its biggest monthly rise since 1980.
After such a steep and rapid rally, markets showed clear signs of being overbought. This prompted traders and institutional investors to lock in gains, triggering a wave of selling across precious metals.
Record highs triggered the reversal
The sharp correction came just a day after both metals touched lifetime highs. Silver had scaled a peak of ₹4,20,048 per kilogram on MCX, while gold had surged to around ₹1,80,779 per 10 grams. Similar weakness was seen in global markets, with Comex gold slipping over 2 percent to around $5,236 per ounce, reflecting synchronized global profit booking.
US Federal Reserve uncertainty adds pressure
The fall intensified after comments from US President Donald Trump, who indicated that he would soon announce a replacement for Federal Reserve Chairman Jerome Powell. Reports suggested that former Fed Governor Kevin Warsh was among the leading contenders.
This triggered fears of a less dovish Federal Reserve stance, which typically weighs on non-yielding assets like gold and silver. A strengthening US dollar and rising expectations of tighter monetary policy further added to selling pressure.
Is the dip a buying opportunity?
The sharp correction has revived debate over whether the fall offers a fresh buying opportunity or signals the end of the exceptional rally. Analysts at Citigroup’s commodities team described silver as “gold on steroids,” highlighting its heightened volatility. According to them, silver prices are being driven by strong capital inflows, geopolitical risks, and technical factors such as a declining gold-silver ratio. They believe further upside is possible until silver becomes historically expensive relative to gold.
Experts remain divided on the outlook
Not all experts share the bullish view, warned that gold and silver prices could decline by as much as 50 percent by the end of the year if global liquidity tightens further.
However, many market experts continue to maintain a positive long-term outlook for gold, citing geopolitical uncertainty, central bank buying, and inflation risks. According to them, the current fall may be a temporary correction rather than a trend reversal, keeping hopes of another rally alive in the coming months.
