Gold falls over Rs 9,000, Silver tanks nearly Rs 30,000 in a week: Time to panic or buy?

Gold and silver prices remained under pressure as investors reassessed the outlook for US interest rates, inflation and global economic growth.

Analysts said uncertainty over monetary policy and continued selling in gold-backed exchange-traded funds (ETFs) have weighed on sentiment in the precious metals market.

Gold and Silver Price Today

Gold August futures were trading at Rs 1,49,923 per 10 grams, down Rs 2,520 or 1.65 per cent during the day. The contract has declined Rs 9,397 or 5.89 per cent over the past week, Rs 6,707 or 4.28 per cent over the past month, and Rs 20,650 or 12.10 per cent in the last three months.

Silver July futures were trading at Rs 2,35,400 per kg, down Rs 3,128 or 1.31 per cent. The contract has fallen Rs 30,620, or 11.48 per cent, in the past week, Rs 29,167 or 11.03 per cent in one month, and Rs 41,607 or 14.98 per cent over the last three months.

Sharp Correction From Record Highs

Gold has now fallen for a second consecutive session, while silver has extended losses for a fourth straight day. Both metals have corrected sharply from their record highs in domestic as well as international markets.

Market participants said the decline has surprised many investors as gold usually benefits from geopolitical tensions due to its safe-haven appeal. However, analysts said other factors have outweighed those concerns.

Rate Expectations and Strong Dollar Weigh on Prices

Experts said gold had rallied strongly over the past two years on expectations that the US Federal Reserve would begin cutting interest rates. Those expectations have weakened in recent months as inflation concerns have persisted and economic data from the United States has remained relatively strong.

A stronger US dollar has also added pressure on precious metals. Since gold is priced in dollars globally, a stronger US currency tends to reduce demand from international buyers and weighs on prices.

Another key factor behind the decline has been selling in gold ETFs. Recent data showed investors pulling money out of gold-backed funds after the sharp rally seen earlier this year.

Harshal Barot Sees Policy-Driven Correction

Harshal Barot of Metals Focus said the recent correction was largely driven by changing expectations around US monetary policy.

"Markets started the year expecting rate cuts from the US Federal Reserve. However, stronger economic data and persistent inflation have reduced those expectations. This has created pressure on gold prices," Barot said.

He said the US economy has not shown broad signs of weakness despite geopolitical tensions and concerns over energy prices.

"The traditional inverse relationship between gold, the US dollar and bond yields appears to be returning. Until there is clear evidence of economic slowdown or recession risks, gold may remain under pressure in the short term," he said.

Barot added that investors remain cautious about taking fresh positions in gold because there is still uncertainty about the direction of the global economy and US interest rates.

According to him, large amounts of money have moved into money market funds, indicating that investors are preferring to hold cash rather than take exposure to risk assets at present.

Ajay Kedia Warns of Further Weakness

Commodity market expert Ajay Kedia also sees the possibility of further weakness in gold prices. "Inflation remains a concern, and expectations of interest-rate cuts have weakened significantly. Markets are even discussing the possibility of higher rates. This has negatively affected sentiment for gold," Kedia said.

He said historical market corrections show that precious metals can witness sharp declines after reaching record highs. "My base case is that gold may remain under pressure for the next one to one-and-a-half months. Prices could test lower levels before finding stronger support," he said.

Silver Outlook and Buying Opportunity

On silver, experts believe the metal could face additional pressure because it is influenced not only by investment demand but also by industrial demand.

Barot said concerns over global economic growth could affect industrial consumption of silver. "Silver is facing pressure as both a precious metal and an industrial metal. As a result, it could underperform gold in the near term," he said.

Kedia also expects silver prices to remain volatile and said the metal could see further weakness before stabilising.

Analysts said investors should remain cautious despite the sharp correction from record highs. While some long-term investors may view the decline as an opportunity to gradually accumulate positions, experts believe markets are still looking for greater clarity on inflation trends, interest rates and economic growth prospects.

According to analysts, upcoming US economic data and signals from the Federal Reserve will remain the key factors influencing gold and silver prices in the coming weeks.

For now, both precious metals remain under pressure, with experts warning that further short-term weakness cannot be ruled out even after the recent sharp decline from their all-time highs.