Gold and Silver Prices Experience Turbulence After Record-Breaking Rally
The precious metals market, which dominated headlines throughout 2025 with its spectacular rally, has entered a phase of extreme volatility in early 2026. Both gold and silver achieved fresh all-time highs earlier this year, only to witness dramatic corrections that have left investors questioning the near-term trajectory.
Recent Price Movements and Corrections
On Thursday, February 19, 2026, spot gold prices declined by 0.4 percent to $4,961 per ounce, while US gold futures for April delivery fell 0.6 percent to $4,981 per ounce. This easing followed a more than 2 percent climb in the previous trading session. Silver, however, showed resilience during Asian trading hours, recovering to around $76 per ounce.
The correction has been substantial for both metals. Gold has slipped nearly 20 percent from its record level of Rs 1.93 lakh per 10 grams. Silver's decline has been even more pronounced, retreating by Rs 1.77 lakh or 42 percent from its peak of Rs 4.20 lakh per kilogram achieved earlier in 2026.
Historical Context and Volatility Spike
The volatility represents a sharp reversal from the trends of 2025, when gold became the default investment choice for many global investors amid geopolitical turmoil and trade uncertainties during the US presidency of Donald Trump. Silver's rally was particularly driven by rising industrial demand coupled with supply shortages, leading to a 170 percent surge in 2025.
January 31, 2026, marked a significant turning point when silver plunged 27 percent in a single session – its steepest-ever decline. This dramatic drop followed the metal's exceptional performance in the previous year and signaled the beginning of increased market turbulence.
Regulatory Developments: Margin Requirements Withdrawn
In response to the changing market conditions, both the Multi Commodity Exchange of India (MCX) and National Stock Exchange of India (NSE) have decided to withdraw additional margins on gold and silver futures contracts effective February 19. MCX announced the discontinuation of the extra 3 percent margin on all gold futures contracts and the 7 percent additional margin on silver futures that had been imposed earlier this month.
Similarly, NSE Clearing Ltd confirmed that supplementary margins introduced on February 4 – 3 percent for gold futures and 7 percent for silver futures – will be withdrawn. This move reduces upfront capital requirements for traders, enhances capital efficiency for leveraged positions, and is expected to boost speculative interest, fresh trading bets, and overall market liquidity.
Expert Analysis and Market Outlook
Market experts caution that volatility is likely to persist in the near term, even as they maintain confidence in the long-term bullish trajectory for precious metals. Bernard Dahdah, an analyst at Natixis, noted that a dip below the $4,900 mark has triggered bargain hunting in the market. However, he added that in the absence of fresh geopolitical developments, a repeat of last year's sharp rally appears unlikely.
Dahdah expects gold prices to average close to $4,850 over the course of 2026. The outlook for silver remains closely tied to industrial demand dynamics and supply constraints, though recent corrections have tempered expectations for immediate gains.
Factors Influencing Future Price Movements
Several key factors will determine the direction of gold and silver prices in the coming months. The easing of geopolitical tensions has contributed to a firmer US dollar, which typically exerts downward pressure on dollar-denominated precious metals. Profit booking after the extended rally has also played a significant role in the recent corrections.
Additionally, the aggressive buying by central banks seeking to diversify their foreign exchange reserves away from the US dollar – a major driver of gold's rally over the past 18 months – continues to provide underlying support. The withdrawal of additional margin requirements is expected to stimulate trading activity, potentially adding to short-term volatility while improving market depth.
Investors are advised to monitor resistance levels for gold prices and target levels for both metals as the market navigates this period of adjustment. While the long-term fundamentals remain supportive, the near-term path appears fraught with uncertainty and potential for continued price swings.
