Gold Silver Price Drop: Why Precious Metals Are Losing Shine Despite Earlier Rally

After nearly two months of rising momentum, the gold and silver rally has finally hit a wall. Both precious metals have started to decline, signaling a shift in global investor sentiment. The latest correction in bullion prices is influenced by multiple international economic and geopolitical developments.

Rahul Kalantri, VP–Commodities at Mehta Equities Ltd., said that the primary trigger behind this downturn is the US dollar’s sharp recovery. A stronger dollar often makes gold and silver less attractive for global investors, prompting them to liquidate holdings and book profits. In addition, positive progress in US trade negotiations with China and India has reduced the immediate need to seek safety in bullion.

Another major factor weighing on precious metals is the easing geopolitical tension in the Middle East. Signs of peace efforts in Gaza have temporarily lowered global risk perception, leading to profit-taking across commodity markets. When global uncertainty reduces, safe-haven assets like gold and silver typically lose steam.

However, analysts believe that the weakness may not last long. With inflation showing signs of cooling and expectations high for a US Federal Reserve rate cut, lower-level buying has already resurfaced. Rate cuts generally support bullion, as lower interest rates diminish the appeal of interest-bearing assets.

Market Outlook: What Happens Next?

This week carries significant potential for volatility in bullion markets. The US Federal Reserve is likely to announce a 25-bps rate cut, while the European Central Bank and Bank of Japan are expected to maintain their policies. Any surprise hawkish signals could push metals further downward.

On the technical front, gold is finding support around Rs 1,22,470–1,21,780, with resistance expected between Rs 1,23,950–1,24,800. Silver’s key support zone lies at Rs 1,46,250–1,45,150, while resistance is projected in the Rs 1,47,950–1,48,780 range.

Darshan Desai, CEO of Aspect Bullion & Refinery, confirmed that fading safe-haven demand is the biggest short-term pressure point. Optimism around a potential US–China trade agreement combined with the strong dollar continues to weaken bullion demand.

Desai added that the upcoming week remains crucial due to several triggers — the anticipated meeting between US President Joe Biden and Chinese President Xi Jinping, major US tech earnings, and the Fed policy announcement. Any signal indicating fewer-than-expected rate cuts could lead to additional price dips.

On the other hand, renewed geopolitical tensions or dovish commentary from the Fed could quickly revive bullish sentiment and restore shine to precious metals.

(Disclaimer: The opinions shared by market experts are independent and not representative of the views of the publishing organization. Investors should consult with financial professionals before making decisions.)