Gold, Silver See Steepest Correction Since 2020

Chennai: Gold and silver on Wednesday saw the steepest fall in a day since 2020, extending the correction in the past three-four sessions. While long-term prospects are still intact, precious metals may see some more correction in the near term due to both technical and fundamental factors.

Gold prices in the international market have fallen from $4381 per ounce to $4004 – losing 8.5 per cent in the past four sessions. Of this, the single day drop of 5 per cent on Tuesday marked the steepest single-day decline since August 2020.

Mirroring the movement in the international market, gold in the domestic market too fell 8.45 per cent in the past four sessions from a high of Rs 1,32,294 per 10 gm to Rs 120,787 in the Multi Commodity Exchange on Wednesday.

Silver too fell sharply in the international market 13 per cent from $54.46 per ounce to $47.56 and from Rs 170,415 per kg to Rs 144,110 in the MCX, losing 15.13 per cent.

The precious metals halted their rally and gave away a good part of their gains due to both technical and fundamental reasons. The metals had moved up quite significantly, and profit-booking was due.

Further, rally corrections occurred as risk appetite improved on easing US–China tensions. The uncertainties that have been fueling the rally, moderated as the US announced talks with China, Russia and India, said Ajay Kedia, MD, Kedia Commodities.

“The previous session saw the steepest daily drop since August 2020 amid rising market optimism fueled by anticipated easing of US–China trade tensions and the upcoming Trump–Xi meeting,” he said.

Even in the case of silver, the earlier surge was driven by safe-haven demand amid the US government shutdown, rising geopolitical tensions, and concerns over fiscal deficits globally. Additionally, bullish long-term bets on silver’s industrial applications —including electric vehicles, datacenters, and solar energy — alongside limited supply in London and Shanghai vaults, had amplified the rally. The supply has improved, and the current pullback reflects a market recalibration after the intense price spike.

Despite the correction, gold is 60 per cent higher year-to-date.

Analysts expect gold and silver to see more corrections in the near term. “Silver might witness a total drop of 20 per cent and gold 10-12 per cent. However, the long-term prospects are strong for the metals. Traders now await Friday’s US CPI report for additional guidance on monetary policy direction,” he said.