Just a few months ago, gold and silver seemed unstoppable.
was touching fresh record highs almost every week, while was enjoying one of its strongest rallies in years. Investors rushed to precious metals, hoping to protect themselves from global uncertainty, inflation worries and market volatility.
But the mood has changed.
Both gold and silver prices have been under pressure in recent weeks, slipping from their all-time highs. On Thursday, gold and silver prices on the Multi Commodity Exchange (MCX) traded lower, extending their recent losses. While many investors are wondering whether the rally is over, experts say several factors are currently weighing on bullion prices.
So, what is pulling bullion prices lower? And more importantly, what should investors do now?
Investors Are Booking Profits After a Massive Rally
One of the biggest reasons behind the recent decline is profit booking.
Gold and silver delivered strong returns over the past year, prompting many investors to lock in gains. After a sharp rise, some cooling off is considered normal in commodity markets.
When prices climb too quickly, traders often sell a portion of their holdings to secure profits, leading to short-term pressure on prices.
Stronger Dollar and Global Market Sentiment
Gold and silver generally move in the opposite direction of the US dollar.
In recent weeks, expectations around global monetary policy and economic data have supported the dollar, making precious metals relatively less attractive. A stronger dollar also makes gold and silver more expensive for buyers using other currencies, which can reduce demand.
At the same time, investors are closely watching global economic developments, causing shifts in investment flows across different asset classes.
Rising Oil Prices Are Creating New Market Uncertainty
Crude oil prices have remained firm in the $91-93 per barrel range.
Higher oil prices raise concerns about inflation and increase import costs for countries like India. While inflation worries can sometimes support gold, rising energy prices can also create broader market uncertainty and affect investor positioning across commodities.
As a result, traders have become more cautious, contributing to volatility in precious metals.
According to Ponmudi R, CEO of Enrich Money, gold remains under pressure after slipping below an important psychological level.
“MCX Gold opened with a gap down and has slipped below the key Rs 1,50,000 psychological mark, reflecting cautious to negative price action amid persistent volatility,” he said.
He added that gold needs to move back above Rs 1,50,000 to improve sentiment. If that happens, prices could recover towards the Rs 1,54,000-Rs 1,55,000 zone.
However, he warned that if gold falls below Rs 1,46,000, selling pressure could increase further and prices may move towards the Rs 1,45,000-Rs 1,43,000 range.
Silver Is Also Facing Pressure
Silver has followed a similar trend.
Ponmudi R noted that MCX Silver opened lower and is currently attempting to hold support near Rs 2,30,000.
“On the upside, a sustained move above Rs 2,36,000 is required to strengthen momentum and trigger a recovery toward Rs 2,40,000 and further toward the Rs 2,43,000 zone,” he said.
He added that a break below Rs 2,30,000 could push silver towards the Rs 2,28,000-Rs 2,25,000 region.
According to him, geopolitical developments, safe-haven demand and overall market volatility will continue to influence price movements in the coming weeks.
Avoid Panic Selling
Short-term corrections are common after a strong rally. Investors should avoid making emotional decisions based on daily price swings.
Review Asset Allocation
If gold and silver have grown significantly as a portion of a portfolio due to recent gains, investors may consider rebalancing their investments according to their financial goals and risk appetite.
Continue Investing Gradually
For long-term investors, experts often recommend a staggered approach rather than trying to predict market bottoms and tops. Systematic buying during corrections can help reduce the impact of volatility over time.
In other words, the recent decline in gold and silver prices may look worrying, especially after the spectacular rally seen earlier this year. However, the fall appears to be driven by a mix of profit booking, a stronger dollar, rising oil prices and cautious investor sentiment.
For now, experts believe key support and resistance levels will remain crucial. While volatility may continue in the short term, investors with a long-term perspective may want to focus on their overall investment strategy rather than daily price movements.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)