Mumbai’s bullion markets witnessed a dramatic plunge this week as gold and silver prices tumbled sharply, driven by aggressive profit-taking and a surging US dollar. Investors rushed to offload positions, erasing billions in market value amid heightened volatility.
On the Multi Commodity Exchange (MCX), February gold futures nosedived nearly 9%, settling at 1,49,075 rupees per 10 grams. Silver for March delivery suffered an even steeper fall of up to 25%, closing at 2,91,922 rupees per kilogram. Spot market data from the India Bullion and Jewellers Association (IBJA) showed 24-carat gold dropping to 1,65,795 rupees per 10 grams from a previous close of 1,75,340 rupees.
The catalyst? A strengthening dollar following US President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve Chairman. Warsh, known for his hawkish stance on inflation and aversion to low interest rates, spooked precious metals traders. This triggered a wave of selling as leveraged positions—taken as hedges against currency weakness—were unwound en masse.
Analysts point to rising real bond yields and a robust dollar as key factors amplifying the downturn. ‘This rapid liquidation wiped out overleveraged players and billions in value, signaling short-term exhaustion rather than a full-blown bear market,’ one expert noted.
Yet, the long-term outlook remains bullish. Central banks continue snapping up gold reserves, while silver faces structural supply shortages fueled by booming demand from green energy, electric vehicles, AI, and electronics sectors. ‘This dip is a healthy correction, flushing out speculative froth and paving the way for more sustainable gains,’ market watchers say.
Looking ahead, bargain hunters may eye silver around 3-3.10 lakh rupees per kg for re-entry, potentially propelling prices back to 3.40-3.50 lakh levels. For investors, the message is clear: volatility persists, but fundamentals endure.
