Gold and silver prices experienced a significant drop this week, influenced by the strengthening of the dollar and profit booking by investors following a remarkable rally in the metals market. MCX gold February futures fell by 9%, while MCX silver March futures declined by 25% on Friday. Currently, gold futures are priced at Rs 1,49,075, and silver futures at Rs 2,91,922 per kg.
The price of 10 grams of 24-carat gold stood at Rs 1,65,795, down from the previous day’s close at Rs 1,75,340, as reported by the India Bullion and Jewellers Association (IBJA). The decline in precious metal prices was attributed to US President Donald Trump nominating Kevin Warsh as the next Federal Reserve chair, leading to a recovery in the US dollar.
Analysts mentioned that Warsh’s potential appointment raised concerns about higher interest rates due to his stance on inflation control and emphasis on Fed independence. This outlook prompted selling among traders of precious metals, resulting in a significant market correction.
The correction in the market was seen as a necessary adjustment to remove excessive leverage, speculative activities, and overbought conditions, setting the stage for a more sustainable uptrend once market sentiment stabilizes. Despite the recent downturn, analysts highlighted that structural supply deficits and strong industrial demand support a positive long-term outlook for gold and silver.
Market experts suggested that a dip in silver prices to the range of Rs 3 lakh-Rs 3.10 lakh could indicate renewed buying interest, potentially driving the white metal’s value to levels between Rs 3,40,000 and Rs 3,50,000.
