Gold and Silver Prices Experience Sharp Decline Amid Market Volatility
Gold and silver prices have displayed considerable volatility in recent trading sessions, primarily driven by profit-booking at elevated levels. Despite this short-term turbulence, the medium- and long-term outlook for precious metals continues to remain positive, supported by favorable macroeconomic factors.
Significant Price Drops Recorded on Tuesday
On Tuesday, MCX gold prices witnessed a notable decline of more than ₹2,000, representing a decrease of approximately 1.3%, settling at ₹1,56,001 per 10 grams. Simultaneously, MCX silver prices plunged over ₹5,500, marking a drop of more than 2%, to reach ₹2,57,100 per kg.
Currently, gold prices are trading around 16% below the record high price of ₹1,80,779 per 10 grams, which was achieved on January 29. In comparison, silver prices are 59% away from the all-time high price of ₹4,08,487 per kg, indicating a more substantial correction in the white metal.
ETF Performance Mirrors Precious Metals Volatility
Due to the heightened volatility in precious metals, gold and silver-linked Exchange Traded Funds (ETFs) have also experienced a sharp fall in recent sessions. This comes after these ETFs delivered strong returns throughout 2025 and early 2026.
On Tuesday, gold ETFs were mostly trading flat, with minor fluctuations. Nippon India Gold BeES recorded a marginal decline of 0.03%, while ICICI Prudential Gold saw a slight increase of 0.15%. In contrast, silver ETFs faced more pronounced losses. Notable examples include Tata Silver Exchange and Nippon India Silver, along with ICICI Prudential Silver ETF and HDFC Silver ETF, which lost up to 5% in value.
Primary Drivers Behind the Price Slump
The recent pullback in gold and silver prices is mainly attributed to profit-booking activities and evolving macroeconomic expectations. A key factor is the perceived pause in the US Federal Reserve’s rate-cut cycle, which has influenced market sentiment.
The US Federal Reserve is widely anticipated to maintain interest rates unchanged following three successive cuts since September 2025. This shift in outlook led gold prices to fall approximately 2–8% from recent peaks before staging a mild recovery over the past week. It is important to note that this correction does not diminish gold’s long-term strategic appeal. The overall macroeconomic backdrop remains favorable, supported by constrained supply growth, persistent geopolitical risks, and sustained central bank buying, which is likely to remain near 2025 levels.
Record ETF Inflows in India Highlight Strong Demand
In India, gold ETFs achieved their highest-ever net inflows in January 2026, according to data released by the Association of Mutual Funds in India (AMFI) on February 10. Flows to gold ETFs more than doubled from the previous month, reaching ₹24,040 crore. This remarkable surge placed gold ETFs just ahead of equity flows for the first time, underscoring robust investor interest.
Nehal Meshram, Senior Analyst at Morningstar Investment Research India, commented, "The surge suggests gold demand remained exceptionally strong, supported by continued investor preference for safe-haven and diversification exposure."
Investment Considerations for Gold and Silver ETFs
For small and marginal investors, gold and silver ETFs present an attractive investment option. They offer ample liquidity, ease of purchase and sale, no concerns regarding depreciation, and eliminate making charges when selling, among other benefits.
Jitendra Solanki, a SEBI-registered investment expert, explained, "For investors considering gold and silver, ETFs can be a more convenient option compared to buying the metals physically. They enable even small investors to begin with just a few hundred rupees. This makes it easier for marginal investors to gain exposure to gold and silver through ETFs, something that can be challenging in the physical retail market."
Expert Caution and Strategic Advice
However, experts advise caution given the current elevated price levels. Sriram BKR, Senior Investment Strategist at Geojit Financial Services, cautioned, "The current metal prices are still at elevated levels. If supported by new, sustainable fundamental factors, they may hold, though the current signals are mixed."
He further added, "Global tensions and uncertainty may continue to support gold as long as they persist. Both asset classes appear due for a price consolidation, though timing such a move is extremely difficult. We continue to advise investors not to chase recent rallies and instead remain disciplined with asset allocation. Investors should exercise caution at these levels."
Rochan Pattnayak, Chief Investment Officer at Choice AMC Limited, suggested, "Investors should approach gold with disciplined allocation rather than tactical overreaction. A calibrated exposure, for example, 10–15% of a diversified portfolio depending on risk profile, can help strengthen resilience without resorting to concentrated bets during short-term volatility."
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
