Is this just profit booking? Motilal Oswal shares post crash roadmap for gold and silver

Gold and Silver Rate: Just a few days ago, gold and silver were touching record highs almost every day on the MCX. Investors were watching new lifetime highs being created regularly, especially in silver, which was outperforming gold. However, the trend has suddenly changed.

Gold prices on MCX have now fallen by nearly Rs 5,000 from recent highs. At the same time, silver, which was hitting fresh lifetime highs daily, witnessed a sharp sell-off starting around 8 pm yesterday. Since then, silver prices have dropped by nearly Rs 35,500.

This sharp correction after a strong rally has made it difficult for investors to understand the movement in precious metals. Volatility in gold and silver has increased sharply, raising concerns among traders as well as long-term investors.

Add Zee Business as a Preferred Source

MCX gold and silver fall

The recent price movement has caught many investors off guard. Gold and silver were seen as strong safe-haven assets amid global uncertainty, and prices were rising day after day. However, the sudden fall has raised questions about whether the rally has paused or if this is just profit booking after record highs.

Silver, in particular, has shown extreme volatility. After outperforming gold and touching new lifetime highs repeatedly, the metal has now seen one of its steepest declines in recent sessions.

For investors, understanding this sudden shift in momentum has become increasingly challenging.

What is happening in the international gold and silver market today?

Weakness in domestic prices is also reflected in the international markets.

Gold is trading at $5,166, down by $203 or 3.78 per cent, from the previous close of $5,373.03

Silver is trading around $107.220, down by $8.8195 or 7.53 per cent.

Both precious metals have corrected sharply after touching record levels earlier. Gold and silver prices have fallen by more than 5 per cent, marking the steepest intraday decline since October 2025.

Fed Policy and Global Risks: What does Motilal Oswal’s analyst say?

According to Manav Modi, Commodities Analyst at Motilal Oswal Financial Services Ltd, the U.S. Federal Reserve kept interest rates unchanged in its first policy meeting of the year.

Fed Chair Jerome Powell stated that December inflation remains well above the Fed’s 2 per cent target, highlighting persistent price pressures in the U.S. economy. This reinforces expectations that monetary policy may remain accommodative for a longer period, which has traditionally supported precious metals.

Modi added that Powell also raised concerns about:

• The unsustainable U.S. fiscal deficit
• The risk of a U.S. government shutdown
• The impact of tariffs on inflation

Importantly, Powell made it clear that Quantitative Tightening (QT) is no longer the approach and that rate hikes are not on the table. These factors continue to provide underlying support to bullion prices, even as short-term volatility remains high.

Did dollar strength trigger profit booking in gold and silver?

Gold recently surged to yet another record high and briefly traded near $5,600 before witnessing a sharp late-session reversal.

A rebound in the U.S. dollar index, which reversed from recent lows of around 96, triggered aggressive profit booking across the precious metals complex. At the same time, the USD/INR touched a record high, adding pressure on domestic prices.

Interestingly, domestic prices fell more sharply than international prices, raising concerns over price parity. The sharp rally in recent weeks has also pushed some physical buyers to the sidelines, as high prices reduced affordability.

Geopolitical tensions still support safe-haven demand

Despite the sharp correction, geopolitical risks remain elevated.

Tensions intensified after U.S. President Donald Trump urged Iran to return to negotiations on its nuclear programme, warning of severe consequences. Iran responded with threats of retaliation, keeping global risk sentiment fragile.

Such geopolitical uncertainty continues to support gold and silver as safe-haven assets, even though prices have corrected in the short term. Market participants are now closely watching weekly jobless claims, factory orders, and PPI data scheduled this week for further direction.

India's gold demand fell in volume but rose sharply in value in 2025: WGC

According to the World Gold Council (WGC), India’s gold demand in 2025 showed a clear contrast between volumes and value due to record-high prices.

India Gold Demand – Full Year 2025

Total gold demand stood at 710.9 tonnes, down 11 per cent compared to 802.8 tonnes in 2024

Gold demand value rose 30 per cent year-on-year to Rs 751,490 crore

Jewellery Demand

Volume declined 24 per cent to 430.5 tonnes

Value increased 12 per cent to Rs 454,390 crore

Investment Demand

Volume rose 17 per cent to 280.4 tonnes

Value surged 73 per cent to Rs 297,100 crore

On the supply side:

Gold recycling fell 19 per cent to 92.7 tonnes

Gold imports declined 17 per cent to 663.7 tonnes

Average prices surged sharply in 2025:

US$/oz average price: $3,431.5

INR/10g average price: Rs 101,572.7 (excluding import duty and GST)

Q4 2025: Investment demand emerges as a bright spot

WGC data shows that in Q4 2025 (October–December), India’s gold demand stood at 241.3 tonnes, down 9 per cent from Q4 2024. However, the value of demand jumped 49 per cent to Rs 303,470 crore.

• Jewellery demand fell 23 per cent to 145.3 tonnes
• Investment demand rose 26 per cent to 96 tonnes
• Investment value surged 108 per cent to Rs 120,700 crore

Gold imports during Q4 stood at 215.1 tonnes, down 5 per cent, while recycling dropped 27 per cent, indicating that consumers preferred holding on to their gold despite record prices.

What does WGC expect for gold demand in 2026?

Commenting on the trend, Sachin Jain, Regional CEO – India, World Gold Council, said that India’s gold market in Q4 2025 reflected the dual impact of record-high prices and changing consumer behaviour.

He said that while jewellery demand was impacted by affordability pressures, investment demand showed strong growth, highlighting gold’s importance as a long-term portfolio hedge.

Looking ahead, WGC expects India’s gold demand in 2026 to be around 600–700 tonnes, supported by:

• Persistent global economic and geopolitical uncertainty
• A potentially softer interest rate environment
• Continued diversification by global central banks
• Investment demand is expected to remain strong, driven by growing interest in ETFs and digital gold.

Volatility is high, but gold’s long-term case remains strong

Gold and silver have seen sharp corrections after touching record highs, but experts believe the long-term outlook remains supported by global risks, accommodative monetary policy, and strong investment demand.

For investors, short-term volatility may continue, but gold and silver remain key assets during times of economic and geopolitical uncertainty.