Gold and Silver Prices Experience Another Sharp Decline in Domestic Markets
The domestic commodity markets witnessed another significant downturn as gold and silver prices crashed on Thursday. Gold prices dropped by approximately 3% to Rs 1.6 lakh per 10 grams, while silver experienced a more severe fall of 10% to Rs 2.68 lakh per kilogram. This decline mirrored the broader trend in global markets, where silver plummeted over 13% and gold declined by 2.77%.
A Rollercoaster Journey for Precious Metals Since 2025
The current price movement continues the volatile trajectory that gold and silver have followed since 2025. These precious metals captured investor attention with an unprecedented rally that surpassed all expectations, continuing well into 2026. During this bull run, gold approached the Rs 2 lakh per 10 grams milestone, while silver crossed Rs 4 lakh per kg in late January.
However, last week brought a savage selloff that wiped trillions of dollars from market capitalization. Market analysts attributed this dramatic correction to US President Donald Trump's selection of a Federal Reserve governor and widespread profit booking by investors. A brief recovery followed, partially driven by escalating geopolitical tensions that have since shown signs of easing.
Multiple Factors Driving the Current Price Crash
Maneesh Sharma, AVP - Commodities & Currencies at Anand Rathi Shares and Stock Brokers, explained the current market dynamics: "Gold fell below $4,800 per ounce in spot trading, ending a two-day gain as the strengthening US dollar applied downward pressure. This dollar strength followed the Federal Reserve signaling caution regarding potential rate cuts."
Sharma highlighted that Fed Governor Lisa Cook's recent statement opposing additional rate cuts, prioritizing inflation risks over labor market concerns, combined with President Trump's nomination of Kevin Warsh as the next Fed chair—perceived as more hawkish than other candidates—has led markets to anticipate a slower pace for potential rate cuts.
Silver faced additional pressure from developments in China, where Shanghai silver futures dropped approximately 15% during trading. A major Chinese silver futures fund, UBS SIDC, hit its daily loss limit of about 10% for the fourth consecutive day, indicating panic selling and forced exits in the market.
Praveen Singh, Head of Commodities at Mirae Asset ShareKhan, noted: "Precious metals are tumbling today due to a confluence of numerous negative factors. The stronger Dollar Index, currently at 97.80 and up 0.20% for the day, has gained nearly 2.4% since its four-year low reached on January 27."
Market Outlook and Predictions for Coming Days
Despite the current downturn, Sharma maintains a long-term bullish perspective on gold: "Overall factors driving gold, including geopolitical risks, robust central bank buying, concerns about Fed independence, rising US debt, trade uncertainty, and de-dollarization, would continue to support this safe-haven asset. We still anticipate gold crossing $6,000 per ounce levels in the second half of 2026."
Singh expressed caution about near-term prospects: "Since geopolitical worries have been a key tailwind for precious metals and other commodities, easing geopolitical concerns will weigh on commodities. Bitcoin crashing below $70,000 to a 15-month low is also hurting market sentiment."
He added: "Many investors caught in the January 30 commodities meltdown will try to exit on any bounce. We expect huge volatility due to lingering geopolitical uncertainties and the upcoming US Non-Farm Payroll report."
Sharma anticipates continued volatility in the near term: "With the recent downside movement, precious metals volatility will persist while higher volatility environments may moderate compared to last week. However, a Federal Reserve leadership shift might cap gold's upside as markets anticipate a more hawkish and independent Fed under Warsh."
Market expectations for Federal Reserve rate cuts have diminished significantly. According to the CME FedWatch tool, financial markets currently price in nearly 46% odds of a rate reduction at the June policy meeting, down from over 60% in recent weeks.
Sharma concluded: "We might see some more downside in the coming days. Overall short-term support is seen around $4,650-4,680 per ounce levels, while Chinese speculators and traders may step in at lower levels in the coming days."
