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Gold, Silver Prices Crash 9-25% as Dollar Surges, Investors Book Profits

Gold and silver prices witnessed a dramatic meltdown this week, with futures plunging 9% and 25% respectively, driven by a strengthening US dollar and aggressive profit booking. The sell-off was triggered by expectations of a less dovish Federal Reserve under a potential new chair, leading to a swift unwinding of leveraged positions. Analysts describe the event as a violent liquidation that erased billions in market value, flushing out speculative excess. However, the long-term outlook remains positive due to structural supply deficits and robust industrial demand, positioning the correction as a healthy reset for future gains.

Key Points: Gold & Silver Prices Plunge Amid Dollar Strength, Profit Booking

  • MCX gold futures down 9%
  • MCX silver futures crash 25%
  • US dollar recovery triggers sell-off
  • Long-term bullish bias remains intact
  • Correction seen as healthy market reset
2 min read

Silver, gold prices plummet amid aggressive profit booking

Gold and silver prices plummet as US dollar strengthens and investors aggressively book profits. Analysts see a healthy correction, not a bear market reversal.

"violent liquidation, erasing billions in market value and flushing out weak hands - analysts"

Mumbai, Jan 31

Gold and silver prices saw a meltdown this week, amid dollar strengthening and aggressive profit booking from investors after an unprecedented rally in metal.

MCX gold February futures dipped 9 per cent while MCX silver March futures slid down 25 per cent on Friday. Currently gold futures stand at Rs 1,49,075, while silver futures at Rs 2,91,922 per kg.

The price of 10 gram 24-carat gold was at Rs 1,65,795 down from Rs 1,75,340 of previous day's close, according to data published by the India Bullion and Jewellers Association (IBJA).

The bearishness in precious metals came as US President Donald Trump nominated Kevin Warsh as the next Federal Reserve chair which fuelled a recovery in the US dollar.

Analysts said Warsh would be less supportive of lower interest rates due to his hawkish stance on inflation control and emphasis on Fed independence, which prompted selling among precious-metals traders.

"US dollar strengthened, real yields rose and leveraged positions in gold and silver viewed as overextended debasement hedges unwound swiftly. This resulted in violent liquidation, erasing billions in market value and flushing out weak hands in a classic euphoria-to-exhaustion phase rather than signalling a structural bear market reversal," analysts noted.

However, they maintained that structural supply deficits and industrial demand continue to underpin the bullish bias. "Relentless central bank gold accumulation, silver's structural supply deficits amid surging industrial demand from green energy, EVs, AI and electronics" support the long-term positive outlook, they said.

According to market watchers, the correction served as a healthy reset purging excess leverage, speculative froth, and overbought conditions positioning the market for more sustainable upside once sentiment stabilises.

Regarding silver, they said that industrial demand convergence maintains relative strength potential and a dip to Rs 3 lakh-Rs 3.10 level would signal renewed buying interest, potentially taking the white metal to Rs 3,40,000 to Rs 3,50,000 levels.

- IANS

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Reader Comments

S
Sarah B
As an investor, this volatility is nerve-wracking. The article says it's a healthy correction, but a 25% slide in silver is massive. It shows how much our markets are at the mercy of US Fed decisions. Need to be very cautious.
P
Priyanka N
My father always says, "Sone pe suhaga" (icing on the cake). The long-term story for silver is strong with EVs and solar. This dip might be a buying opportunity for the long haul. The industrial demand won't slow down.
A
Aman W
Respectfully, the analysts' tone feels a bit too optimistic after such a crash. Calling it a "healthy reset" is easy when it's not your money that got wiped out. Retail investors who entered late are suffering. More balanced reporting needed.
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Karthik V
This is why physical gold is king for Indian households. Futures may dip and crash, but the gold in my locker retains its value for generations. Market noise doesn't change its fundamental worth in our culture.
M
Michael C
Interesting to see the direct link between a Fed chair nomination in the US and jewellery prices in Mumbai. Truly a globalized market. The "euphoria-to-exhaustion" phase described is a classic market cycle.

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