Gold, silver pull back from peaks as volatility tests 2026 bull case; what's ahead of us

Gold and silver markets have entered 2026 on a volatile note, retreating sharply from record highs after an extraordinary rally driven by geopolitical risk, currency weakness and aggressive investor positioning. The pullback has prompted a debate among analysts on whether the surge has run its course or marks a longer-term repricing of precious metals.

Gold prices slipped after scaling historic peaks earlier this month. On the MCX, 24-carat gold futures were trading at Rs 1,55,569 per 10 grams on January 30, down about 9 per cent from the previous close, after touching a record Rs 1,82,130 a day earlier.

Internationally, spot gold fell to around $4,988 an ounce as a rebound in the US dollar triggered profit-taking. Despite the correction, global investment banks remain constructive on the medium-term outlook. Deutsche Bank and Société Générale have projected gold prices could rise to $6,000 per ounce in 2026, citing sustained central bank buying, diversification away from dollar assets and limited real returns from fixed income markets.

Analysts note that gold’s underlying support remains intact even as near-term volatility intensifies. Central banks, particularly in emerging markets, continue to accumulate bullion, while persistent geopolitical uncertainty and expectations of easier monetary policy are reinforcing gold’s appeal as a hedge against financial instability.

Silver swings

Silver, however, has seen even sharper swings. After surging more than 60 per cent in January alone, silver prices have retreated as traders locked in gains. International prices slipped below $116 per ounce after hitting record highs above $121 earlier in the week. On the MCX, silver fell nearly 6 per cent intraday to around Rs 3,75,900 per kg after peaking close to Rs 4,20,048.

The rally in silver has been driven by a combination of safe-haven demand and strong industrial consumption, particularly from solar energy, electric vehicles and electronics linked to artificial intelligence. Hareesh V, Head of Commodity Research at Geojit Investments, said persistent supply deficits have compounded the upside. “Silver has been in deficit for five consecutive years, while industrial demand continues to rise. Monetary factors such as rate-cut expectations and a weaker dollar have amplified investment flows,” he said, while cautioning that silver’s inherent volatility leaves room for steep corrections.

Market participants broadly view the recent decline as a technical correction rather than a breakdown in fundamentals. Justin Khoo, Senior Market Analyst at VT Markets, said silver’s pullback was largely driven by positioning. “Silver’s higher volatility and its dual role as an industrial and monetary metal make it more prone to sharp corrections compared to gold,” he said.

Outlook on silver remains more divided than gold. Citigroup recently raised its near-term silver target to $150 per ounce, describing the rally as “gold on steroids” amid capital inflows and a falling gold-to-silver ratio. Some projections extend even higher if historical valuation ratios return to past lows. Others urge caution, pointing to overbought technical indicators and the risk that easing geopolitical tensions or stronger mine output could temper prices.

Ponmudi R, CEO of Enrich Money, said silver is consolidating around key support levels, suggesting a pause rather than exhaustion of the trend. Meanwhile, Rahul Kalantri of Mehta Equities noted that precious metals are on track for their strongest monthly performance in decades, even as volatility spikes.

As 2026 unfolds, analysts expect gold and silver to remain volatile, but maintain that short-term corrections do not negate the longer-term drivers of geopolitical risk, monetary policy uncertainty and structural supply-demand imbalances shaping the precious metals market.