Why gold and silver prices fell 12–20% despite safe-haven status since war, and what's next | Anil Singhvi explains

Gold and silver prices recovered in early trade on Friday after witnessing a sharp decline in the previous session in both international and domestic markets. The rebound comes after heavy selling pressure triggered by inflation concerns, uncertainty over US Federal Reserve rate cuts and rising global volatility.

Precious metals had come under sharp pressure on Thursday after the US Fed maintained a status quo on interest rates and signalled a cautious stance on future rate cuts.

On Thursday, gold April futures in international markets settled at USD 4,605.70 per troy ounce, down 5.93 per cent. Silver May futures settled at USD 71.215 per troy ounce, down 8.22 per cent.

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In domestic markets, gold April futures settled at Rs 1,44,954 per 10 grams, falling 5.27 per cent. Silver May futures settled at Rs 2,31,460 per kilogram, down 6.74 per cent.

Early rebound on MCX

In early trade on Friday on MCX, both metals recovered some of the previous session’s losses, although market sentiment remained cautious.

Gold April futures were trading around Rs 1,47,958 per 10 grams, up 2.07 per cent from the previous close. The contract moved between Rs 1,47,406 and Rs 1,48,302 in early trade. It opened at Rs 1,48,302 compared to the previous close of Rs 1,44,954.

Silver May futures were trading around Rs 2,38,600 per kilogram, up 3.08 per cent. The metal traded in a range of Rs 2,38,300 to Rs 2,40,000. The contract opened at Rs 2,39,948 versus the previous close of Rs 2,31,460.

Silver and Gold Prices Falling Since War

Gold and silver prices have seen a sharp correction since the start of the war, declining significantly over a short period. Gold has fallen from around Rs 1,69,000 on March 2 to about Rs 1,47,762 on March 20, marking a decline of Rs 21,238, or about 12.6 per cent over 18 days.

Similarly, silver has dropped from around Rs 2,97,000 to Rs 2,38,055 during the same period, a fall of Rs 58,945, or around 19.8 per cent.

The trend remains weak even in the short term, with gold declining by Rs 11,589, or 7.25 per cent, and silver falling by Rs 27,333, or 10.28 per cent, over the past one week, highlighting sustained selling pressure in precious metals since the beginning of the conflict.

Why did gold and silver fall?

Anil Singhvi said the sharp fall was mainly due to profit booking after a strong rally before the war began. “Before the war, gold and silver had already seen a strong rally. That led to profit booking once the conflict started,” he said.

He added that the advice from the beginning of the conflict was to avoid fresh buying. “We had clearly said not to buy gold and silver when the war started. If prices rise due to war, book profits and stay aside,” he said.

He said another key factor was the stance of the United States. “The US does not want gold and silver to remain strong. It wants the dollar to strengthen,” he said.

He added that global central banks shifting towards gold instead of the dollar also contributed to volatility.

Market behaviour surprises investors

Singhvi said the recent movement has been contrary to traditional market behaviour. “If crude oil is rising sharply due to war, then ideally, gold and silver should also rise. But markets do not always behave as expected,” he said.

He added that many investors expecting a rally in precious metals during the conflict were caught off guard.

Supply pressure and weak trend

He said the speculative momentum in gold and silver has weakened globally. “The global speculative momentum in gold and silver has broken. That is why supply is coming at every level,” he said.

He added that continuous selling pressure has capped any strong recovery in prices.

Expert view: volatility to remain high

Manoj Kumar Jain said gold and silver witnessed a sharp fall and hit a six-week low in international markets due to inflation fears and uncertainty over Fed rate cuts.

He said the trend has turned volatile and bearish in the short term. He added that prices may see a “dead cat bounce” from lower levels, but advised traders to use such rallies to exit long positions and wait for stability before fresh buying.

According to him, gold has support at USD 4,540–USD 4,470 and resistance at USD 4,664–USD 4,740 per ounce. Silver has support at USD 68.00–USD 64.00 and resistance at USD 76.00–USD 78.40 per ounce.

In domestic markets, he said gold has support at Rs 1,41,400–Rs 1,39,500 and resistance at Rs 1,47,200–Rs 1,49,100. Silver has support at Rs 2,24,400–Rs 2,17,000 and resistance at Rs 2,38,000–Rs 2,44,000.

What should investors do?

Singhvi said investors should avoid aggressive buying at current levels and wait for clearer signs of bottom formation. “We had advised selling earlier, and now the focus is on when to buy. But this is not the time to rush into fresh buying,” he said.

He suggested a staggered investment approach over the coming weeks and months instead of lump-sum buying. “Bottom formation will take time. Investors can consider short-term SIP instead of aggressive buying,” he said.

Market participants said gold and silver are likely to remain volatile in the near term due to movement in the dollar index, crude oil prices and ongoing geopolitical tensions. They added that while prices have seen a rebound in early trade, the broader trend remains cautious after the sharp correction in the previous session.