Gold, silver prices crash after record highs; Motilal Oswal flags sharp sell-off

Gold and silver prices witnessed a dramatic reversal on January 30, tumbling sharply from historic highs as profit-taking, a rebound in the US dollar and rising global uncertainty triggered one of the steepest intraday declines in months, according to Motilal Oswal. Domestic prices fell even more sharply than global benchmarks, raising fresh concerns over price parity and near-term volatility, even as bullion remains on track for one of its strongest monthly performances in decades.

As of 1 pm on January 30, domestic gold was trading at Rs 1,65,302, while silver stood at Rs 3,67,291, both sharply lower from recent peaks. Motilal Oswal noted that gold and silver prices dropped by more than 5 per cent intraday, marking the steepest fall since October 2025, as the broader precious metals complex cooled after a relentless rally.

What triggered the sudden fall in gold and silver prices?

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Motilal Oswal said gold briefly surged to fresh record levels near $5,600 per ounce before a late-session reversal set in. The pullback came as the US dollar strengthened and traders rushed to lock in gains after the recent run-up in prices, triggering a sharp sell-off across precious metals. Silver was hit the hardest, sliding much more than gold as leveraged bets were quickly unwound. Analysts said the rally had become too one-sided, leaving prices exposed to a correction as soon as global risk sentiment shifted, even slightly.

Domestic prices fall more than global rates, parity concerns emerge

One striking feature of the latest correction was the sharper decline in domestic prices compared with international markets. Motilal Oswal highlighted this mismatch as a potential concern, especially at a time when the rupee was coming under pressure and the dollar index was bouncing back from recent lows around the 96 mark.

Despite the USD-INR touching record highs, domestic bullion prices corrected more aggressively, indicating heavy local profit-taking and reduced participation from physical buyers at elevated levels.

Strong rally pushes physical buyers to sidelines

The sharp rise in prices over recent weeks has already begun to impact physical demand. Motilal Oswal noted that, according to World Gold Council data, central bank gold buying slowed in the fourth quarter of 2025, but strong inflows from investors more than made up for the shortfall. Jewellery demand has become more price-sensitive as gold prices remain high, while silver’s rapid rise has added volatility given its role as both a precious and industrial metal.

Geopolitical tensions and Fed signals are keeping markets jittery. After former US President Donald Trump urged Iran to negotiate a nuclear deal, Tehran’s threats of retaliation have kept uncertainty high. On the monetary side, the Federal Reserve held interest rates steady, though markets are pricing in a possible rate cut in June. The upcoming appointment of a new Fed chair to replace Jerome Powell in May adds another layer of unpredictability.

Recent US economic data has been mixed. Consumer confidence and weekly jobless claims have supported bullion prices, while stronger-than-expected factory orders provided further backing. Motilal Oswal cautioned, however, that gold and silver prices will remain sensitive to short-term macroeconomic data and currency moves. Investors are now watching US producer price index figures closely, as they could influence interest rate expectations and set the tone for near-term price action.

Even with the recent pullback, gold is still on track for its strongest monthly performance in decades, driven by safe-haven demand, central bank activity, and ongoing global uncertainty.

Motilal Oswal said investors should brace for continued volatility in the near term, with sharp intraday swings likely, but added that the broader structural factors supporting bullion remain intact despite the sudden and steep fall.