Precious metals have roared back to life in Tuesday's trading session, with both gold and silver staging a spectacular recovery after enduring their worst two-day decline in more than a decade. This dramatic turnaround comes as investors rushed to accumulate these safe-haven assets following a historic sell-off that had sent shockwaves through global commodity markets.
Historic Plunge Followed by Remarkable Recovery
After Friday's devastating plunge—which marked gold's worst single-day performance in 46 years—and another 1.9% retreat on Monday that left gold down 13% over two sessions, the precious metal has made an impressive comeback. April futures contracts on Comex rebounded sharply, gaining 7% or approximately $325 to reach the day's high of $4,975 per troy ounce. This represents the biggest daily gain for gold since November 2008, signaling a remarkable reversal of fortune for the yellow metal.
Silver prices have followed a similar trajectory, gathering significant momentum following a brutal two-day sell-off. March silver contracts on Comex surged nearly 15% to hit the day's high of $88.4 per troy ounce. With today's substantial gains, silver prices have recovered nearly 50% of the cumulative losses suffered over the previous two trading sessions, demonstrating the metal's resilience in the face of extreme market volatility.
Domestic Market Mircomes Global Recovery
In the Indian markets, the recovery has been equally impressive. The February futures contract of gold on MCX crossed the psychologically important ₹1.5 lakh mark, with prices accelerating by ₹11,243 per 10 grams to reach the day's high of ₹1,53,460 per 10 grams. This represents a significant jump that has caught the attention of domestic investors and traders alike.
Meanwhile, silver futures on MCX have staged an even more dramatic recovery. The March silver futures contract opened the session higher at ₹2,45,711 per kilogram and maintained strong momentum throughout the day, eventually hitting the day's high of ₹2,75,267. This represents a staggering jump of approximately ₹39,000 compared with Monday's close of ₹2,36,261, highlighting the metal's extraordinary volatility and recovery potential.
Understanding the Recent Sell-Off
The recent sell-off across precious metals was triggered by multiple factors that converged to create perfect storm conditions. US President Donald Trump's nomination of Kevin Warsh to lead the Federal Reserve sent the US dollar index higher, making greenback-priced commodities more expensive for holders of other currencies. While investors expect Warsh to favor interest rate cuts, they anticipate he will tighten the Fed's balance sheet—a move typically supportive of the dollar and bearish for dollar-denominated commodities like gold and silver.
Adding to the pressure, CME Group raised margin requirements on precious metal futures. This technical adjustment, combined with the massive January rally that had preceded the correction, prompted investors to lock in profits, further weighing down prices during the two-day plunge.
Analyst Perspectives on the Recovery
Market experts are closely watching the recovery with keen interest. Jateen Trivedi, VP and Research Analyst (Commodity and Currency) at LKP Securities, noted that gold traded strongly positive as CME gold surged above $4,900 in the first session. This triggered sharp upside momentum in MCX gold, which rallied above ₹1,51,000, gaining nearly ₹8,000 intraday. According to Trivedi, this breakout reflects renewed safe-haven buying and short covering at lower levels, suggesting that investor confidence in gold's long-term value remains intact despite recent volatility.
From a technical perspective, Trivedi identifies immediate support for gold near ₹1,45,000, while resistance is seen around ₹1,55,000. These levels will be crucial in determining whether the current recovery can sustain its momentum in the coming sessions.
Long-Term Outlook Remains Positive
Ponmudi R, CEO of Enrich Money, provided detailed technical analysis for both domestic and international markets. For Comex gold, he noted strong demand in the $4,500–$4,400 support band. Sustained consolidation above this critical base could set up the next leg higher, with a decisive move above $5,000–$5,100 potentially reopening upside toward prior highs.
On MCX gold, Ponmudi observed that a sustained move above ₹1,50,000 could revive upside momentum toward ₹1,65,000–₹1,70,000. This perspective keeps the medium-term outlook positive despite near-term swings and volatility that might test investor patience.
For MCX silver, he identified the ₹2,20,000–₹2,35,000 zone as a critical base, while the ₹2,60,000–₹2,70,000 zone represents immediate resistance. Sustained momentum could extend the move toward ₹3,25,000, with dips continuing to favor accumulation for positional traders who understand the metal's volatility patterns.
Regarding Comex silver, Ponmudi noted that support lies at $71–$75, while a sustained breakout above $88–$90 could trigger the next impulsive move toward $100–$105. He emphasized that structural supply deficits and steady industrial demand continue to support the bullish bias for silver, suggesting that fundamentals remain favorable despite technical corrections.
Market Implications and Investor Considerations
The dramatic recovery in precious metals highlights several important market dynamics. First, it demonstrates the enduring appeal of gold and silver as safe-haven assets during periods of market uncertainty. Second, it shows how quickly sentiment can shift in commodity markets, with extreme moves in one direction often triggering equally dramatic reversals.
For investors, the recent volatility serves as a reminder of the importance of risk management and portfolio diversification. While the recovery has been impressive, the preceding plunge was equally dramatic, underscoring the need for careful position sizing and stop-loss strategies when trading volatile commodities.
The gold-silver ratio, which had risen to near 60 during the sell-off, will be closely watched by sophisticated investors as it can provide signals about relative value between the two metals. Historically, extreme readings in this ratio have often preceded mean reversion moves, making it a valuable tool for timing entries and exits in precious metals markets.
Disclaimer: This analysis is for educational purposes only. The views and recommendations expressed above are those of individual analysts or broking companies, and not of Mint. Investors are advised to consult with certified experts before making any investment decisions.
