Gold and silver prices tumble amid US dollar rally, profit booking

Gold and silver prices fell sharply this week on profit booking and a strengthening US dollar after a historic rally. Analysts view the correction as a healthy reset, with long-term bullish trends supported by industrial demand and central bank gold accumulation.

Mumbai: 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.

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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.