Analysts are forecasting a period of intense volatility for gold and silver prices in the coming week. The precious metals market is bracing for sharp swings as global investors digest a mix of crucial US economic indicators and escalating geopolitical tensions following a dramatic US military operation in Venezuela.
Geopolitical Shock and Economic Data in Focus
The market's immediate attention is captured by the geopolitical fallout from the reported capture of Venezuelan President Nicolas Maduro and his wife by US forces. Authorities have accused them of drug trafficking. This development has the potential to unsettle global financial markets significantly.
Experts warn that concerns over possible supply disruptions from Venezuela, which holds the world's largest proven oil reserves, could push both bullion and crude oil prices higher. Aggressive trading is expected at the week's start, particularly on Monday, as the situation unfolds.
Simultaneously, market participants will closely track key US economic data. This includes the ISM Manufacturing figures, the December ADP employment report, and the official unemployment rate. Comments from several US Federal Reserve officials will also be scrutinized for hints about the future path of interest rates, a primary driver for non-yielding assets like gold.
Recap of a Turbulent Week for Precious Metals
Despite the supportive geopolitical backdrop, both gold and silver witnessed sharp corrections last week after scaling record highs in late December. This highlights the market's current choppy and unpredictable nature.
On the Multi Commodity Exchange (MCX), gold futures (February contract) fell by Rs 4,112, or 2.94 per cent, over the week. After hitting a lifetime high of Rs 1,40,444 per 10 grams, the yellow metal slid over 3% to settle at Rs 1,35,761 per 10 grams on Friday.
Prathamesh Mallya, DVP of Research for Non-Agri Commodities and Currencies at Angel One, attributed the decline to profit-booking at elevated levels and thin liquidity due to the year-end and Christmas holidays. He noted gold traded in a wide range of Rs 1,34,000 to Rs 1,40,000 per 10 grams, reflecting heavy selling pressure.
Silver prices mirrored this volatility. On the MCX, silver futures fell by Rs 3,471, or 1.45 per cent, weekly. After touching a record peak of Rs 2,54,174 per kg, prices crashed sharply by Rs 17,858, or 7.02 per cent, to close at Rs 2,36,316 per kg on Friday.
The international markets told a similar story. Comex gold futures declined by $223.1, or 4.9 per cent, during the holiday-shortened week, ending at $4,329.6 per ounce. Silver saw a steeper fall of 8 per cent, or $6.18. After hitting a record of $82.67 per ounce, silver tumbled 14.1 per cent, or $11.65, to settle at $71.01 per ounce.
Expert Outlook and Future Projections
Pankaj Singh, Founder and Principal Researcher at Smart Wealth AI, observed that gold's ability to hold near the $4,300-per-ounce level reflects cautious investor positioning. This is due to a combination of easing US inflation and persistent safe-haven demand. He added that silver's short-term correction was exacerbated after CME Group raised margin requirements for gold futures, forcing a reduction in leveraged positions.
Looking further ahead to 2026, Singh provided a nuanced forecast. He suggested that while gold could see gains of 10 to 60 per cent over the year, sharp interim corrections of up to 20 per cent remain possible in a volatile environment.
For silver, he pointed to a potential downside risk of 5 to 30 per cent. However, strong industrial demand could also drive prices as much as 40 per cent higher if supply constraints continue. "Structurally bullish, policy-driven precious metals cycle may continue, but risk of significant corrections is also possible," Singh concluded.
As the new week begins, traders are advised to buckle up for a rocky ride. The interplay between hard economic data from the US and the fluid geopolitical crisis in Venezuela is set to dictate the near-term direction for gold and silver prices, both in India and globally.
