The prices of precious metals witnessed a sharp reversal this week as both Gold and Silver saw significant declines globally. The correction marks one of the steepest pull-backs in years, with analysts pointing to global market shifts as the primary trigger.
What’s happened?
- Gold fell more than 5 % in a single session — its biggest one-day drop since 2020.
- In India, the domestic gold price slid to around ₹ 1,22,320 per 10 gms after recent highs.
- Silver similarly saw a sharp correction, after having surged earlier in the year.
Why this dramatic fall?
Several interlinked global factors have combined to trigger the sharp pull-back in bullion markets:
- Profit-booking after rapid gains
After prolonged rallying, many investors locked in gains. It appears bullion had become “overbought”. - Stronger US dollar and higher yields
A firmer dollar makes non-dollar-priced commodities like gold and silver more expensive for other currency-holders, reducing demand. - Reduced safe-haven demand amid improving global risk appetite
Easing tensions (such as better trade-talks between the US and China) have dampened some of the safe-haven appeal of bullion. - Technical and psychological resistance
With bullion having reached record highs, markets were vulnerable to correction. Analysts pointed to key support levels now being tested.
What it means for India and investors
- For Indian consumers and investors, the fall offers a potential buying opportunity, especially if physical demand resumes.
- However, given volatility, short-term traders should exercise caution; support levels are now under scrutiny.
- The long-term fundamentals for gold (inflation hedge, central-bank buying) remain largely intact, but the near-term trend is corrective.
What to watch
- Upcoming key economic data such as the US Consumer Price Index (CPI) and signals from the Federal Reserve will influence bullion direction.
- The trend of the dollar index and global equity market health will remain major drivers.
- Physical demand from key markets such as India and China, and supply-side developments in silver especially (given its industrial usage) will also matter.
