Why are gold and silver prices falling today after record highs? Anil Singhvi explains

Gold and silver futures on the Multi-Commodity Exchange (MCX) were trading lower on Friday amid sharp volatility, reflecting profit booking after a strong rally to record highs, said market expert Anil Singhvi.

Gold and silver futures traded sharply lower. Gold 5 February futures were quoted at Rs 1,56,300, down Rs 13,103 or 7.73 per cent. Silver 5 March futures were trading at Rs 3,39,910, declining Rs 59,983 or 15 per cent.

Fall Linked to Volatility After Record Highs

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Singhvi said the recent fall in gold and silver prices should be seen in the context of extreme volatility following record highs, rather than as a result of any major negative trigger.

Sharp Swings in Gold Prices

Gold witnessed sharp swings in the international market after touching a new lifetime high. Prices fell nearly $500 in a single session before recovering a large part of the losses. Similar movements were seen in the domestic market, where gold hit a fresh record high before slipping by around Rs 1,000 intraday and then staging a recovery to trade near record levels.

Heavy Volatility in Silver

Silver also saw heavy volatility. In global markets, silver touched a record high before correcting sharply and then recovering. In the Indian market, silver hit an all-time high and then fell sharply by about Rs 65,000 intraday. Prices later bounced back strongly, recovering a significant portion of the losses.

Technical Correction, No Major Trigger

Anil Singhvi said, “There was no major fundamental trigger behind this sharp fall. It was a pure technical correction after a one-sided rally.”

He said the sharp rise in prices over a short period had increased nervousness among market participants. “Those betting on a rise are fearful of sudden falls, while those betting on a decline are scared of sharp pullbacks,” Singhvi said.

According to Singhvi, the absence of a clear trigger made the price action more volatile. He said expectations around the new US Federal Reserve chair, geopolitical developments, and movements in crude oil added to uncertainty, but none of these factors alone were strong enough to explain the violent intraday swings seen in gold and silver.

Caution Advised for Traders

Singhvi cautioned that such volatility creates difficult trading conditions, especially for short-term traders. He said sudden price movements can quickly trigger stop losses and margin calls. “This kind of volatility can trigger stop losses and margin calls very quickly. Investors should avoid overconfidence and stay cautious,” he said.

He added that both bullish and bearish traders were facing confidence issues due to the unpredictable price action. Singhvi said that after a prolonged one-way rally, markets often see sharp corrections as traders book profits.

According to him, the recent fall does not indicate a change in the long-term trend of gold and silver. Instead, it reflects profit booking after prices moved up sharply in a short span of time.

Singhvi advised investors to remain calm and avoid aggressive positions during periods of extreme volatility. He said chasing quick gains in such conditions can lead to heavy losses. He also cautioned that electronic trading systems can automatically square off positions if margins fall sharply during sudden price swings.

He said investors should wait for volatility to settle before taking fresh positions. “In this kind of environment, restraint is important,” Singhvi said.

According to Singhvi, the recent sharp moves underline the risks involved in trading gold and silver during highly volatile phases. He said investors should focus on risk management and avoid excessive exposure until markets stabilise.