Gold futures for April delivery slid 6%—down Rs 9,140 per 10 grams—to open at Rs 1,43,205, extending a sharp three-session decline of almost Rs 50,000 per 10 grams (26%) from the recent record high of Rs 1,93,096.
Profit-taking and a strengthening US dollar emerged as the key drivers behind the sharp correction.
Baroda BNP Paribas Gold ETF, Edelweiss Gold ETF, and Motilal Oswal Gold ETFs fell upto 16% on the budget day. LIC MF Silver ETF went down by 15% in the same time period.
Ponmudi R, CEO of Enrich Money, a SEBI-registered online trading and wealthtech firm said that near-term caution is warranted due to dollar strength and volatility, but medium-to-long-term forecasts stay firmly bullish.
On Friday, silver plunged as much as 27% (Rs 1,07,968), marking its biggest single-day crash ever and pulling prices back below the Rs 3 lakh mark—just a day after the metal had surged to a record high of Rs 4 lakh.
Gold prices tanked up to 12%, or Rs 20,514, in a single day on January 30, marking their worst one-day rout since March 2013, when prices had fallen 9% on the MCX.The drop in bullion prices came after US President Donald Trump appointed Kevin Warsh as the new Federal Reserve Chair, triggering the dollar’s strongest single-day rally since May last year. The surge pushed the US Dollar Index back above 97 as concerns over central bank independence eased.
What should investors do?
Tapan Patel, Fund Manager-Commodities, Tata Asset Management said that for those already having allocation, the decision to hold or rebalance should be guided by gold-silver ratio and as the ratio compresses toward the 50 mark, investors might consider booking partial profits to reallocate into more stable assets like Gold ETFs, ensuring the portfolio remains aligned with their long-term risk appetite.
While silver’s dual role as a precious and industrial metal positions it as a potent return enhancer, its historical volatility suggests that retail investors should approach the recent rally with caution. Rather than a core hedge, silver is currently best suited for tactical exposure or as a specialized component of a diversified portfolio, Patel said.
Ponmudi R further said that near-term choppiness may linger amid dollar dynamics, but disciplined buying on dips guided by key supports and channel integrity should define the next leg higher in this secular bull market into 2026.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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