Gold down ₹7,000, silver crashes ₹14,000; ETFs in red - should you buy in dips now?

Gold and silver prices witnessed a sharp correction on Monday across domestic and global markets, with bullion rates falling steeply on the Multi Commodity Exchange (MCX) and precious metal ETFs seeing heavy selling pressure.  On MCX, gold futures dropped more than ₹7,000 per 10 grams, while silver plunged nearly ₹14,000 per kilogram during intraday trade, signalling aggressive profit booking after the recent rally.

The selloff in domestic markets mirrored global trends, where bullion prices have been under pressure for several sessions. Spot gold has fallen to a nearly four-month low after logging its steepest weekly decline in decades, while silver has also corrected sharply amid rising bond yields and a stronger US dollar.

According to market commentary shared by The Kobeissi Letter, the latest selloff in precious metals has been unusually sharp and may signal deeper stress in global markets. It noted that gold and silver together erased nearly $2 trillion in market value within a few hours, even as oil prices gave up gains and US stock futures stabilised — a reversal that historically would have supported bullion prices.

The Kobeissi Letter said such erratic price action could indicate forced liquidation by a large market participant along with rising pressure from higher bond yields. The note highlighted that the US 10-year yield climbing to around 4.40%, up sharply in recent weeks, is weighing on multiple asset classes, while thin liquidity and headline-driven trading are increasing volatility across commodities, equities, and metals.

Analysts said the surge in crude oil prices due to the ongoing US-Iran conflict has revived inflation concerns globally. Higher inflation expectations typically push bond yields up and reduce the appeal of non-yielding assets such as gold and silver, triggering selling by investors. At the same time, uncertainty in equity markets has led to liquidation of long positions in precious metals, adding to the downward momentum.

Gold, silver ETFs

The impact of the fall was also visible in exchange-traded funds tracking bullion prices. Gold and silver ETFs declined sharply during the session, with several silver ETFs falling up to 20 per cent intraday as investors rushed to book profits. Among the silver ETFs, Kotak Silver ETF recorded one of the steepest declines, falling to an intraday low of ₹17.77 from the previous close of ₹22.31. Axis Silver ETF and Bandhan Silver ETF dropped by around 11 per cent each, while Edelweiss Silver ETF fell about 10 per cent during the session. Most other silver ETFs also registered declines in the range of 8–9 per cent, reflecting broad-based weakness across the segment.

Most major gold ETFs traded in the red, with losses exceeding 10% on a one-month basis, reflecting the recent correction in global bullion prices and strong profit booking by investors.

Market participants said the sharp fall in ETFs was largely in line with the correction in underlying futures prices, as silver tends to be more volatile than gold due to its dual role as both a precious and industrial metal. 

What lies ahead

Tim Waterer, chief market analyst at KCM Trade, told Reuters that the continuation of the Iran conflict and crude oil prices hovering near the $100 per barrel mark have shifted market expectations away from interest rate cuts towards the possibility of further tightening. According to him, this has reduced the attractiveness of gold from a yield perspective, leading to a pullback in prices. He added that gold’s high liquidity often works against it during risk-off phases, as traders unwind positions to cover losses in other asset classes.

Ponmudi R, CEO of Enrich Money, said COMEX gold remains under pressure after a sharp correction and is currently trading below key short-term moving averages. He noted that the metal is holding within the $4,367–$4,320 support zone, while the $4,400–$4,500 range remains an important resistance band. A move above $4,650 could revive bullish momentum, but a break below $4,250 may accelerate the fall towards the $4,100–$4,150 zone.

On the domestic front, he said MCX gold opened with a gap-down and is holding near the ₹1,36,000 support level. Immediate resistance is seen around ₹1,39,000–₹1,40,000, while a break below ₹1,34,000 could push prices towards ₹1,30,000. The overall bias remains weak as prices continue to trade below key moving averages.

For silver, Ponmudi said COMEX silver is holding above the $64 level after a gap-down opening, but the broader trend remains fragile. Resistance is seen near $68–$70, while a break below $65 could drag prices towards the $62 level.

He added that MCX silver is currently trading in the ₹2,12,000–₹2,14,000 support zone, with resistance placed near ₹2,18,000–₹2,20,000. A breakdown below support could extend losses towards ₹2,08,000 and even ₹2,00,000 if selling pressure continues.

Overall, analysts expect volatility in gold and silver prices to remain high in the near term as markets react to geopolitical developments, crude oil movement, interest rate expectations, and global currency trends.

(With Reuters inputs)