Gold, Silver Slide Sharply: What’s Driving The Fall And Is This A Buying Opportunity?

Precious metals witnessed a sharp selloff on Thursday, with silver plunging nearly 17% in Asian trade and Indian gold and silver-linked exchange-traded funds (ETFs) falling as much as 21%, as the rally that had driven bullion sharply higher in recent months came under heavy pressure.

A weaker U.S. dollar and decreasing geopolitical tensions brought the fall, and a weakening demand under safe haven weakened the demand, creating aggressive profit-booking across the world markets.

Spot silver dropped as much as 17% after briefly trading above $90 per ounce during early Asian hours. The decline marked a sharp reversal from its all-time high hit on 29 January 2026, with silver now down more than one-third from those peak levels.

Gold also fell over 3%, extending a highly volatile week in which prices slipped below $4,500 on Monday, after trading close to $5,600 last week.

Indian Markets Hit Hard As MCX Silver Falls 8%, ETFs Slide Deeply

The sell-off spilt sharply into Indian markets. MCX silver March futures declined more than 8%, while MCX gold was down around 1% during the session.

The impact was even more visible in the equity-linked bullion investment space. Among key instruments:

• Axis Silver ETF fell as much as 21%

• Nippon India Silver ETF dropped 13%

• Nippon Gold BeES declined around 4%

The steep fall was a measure of global price weakness as well as an increase in risk-off market sentiment in financial products tied to commodities.

The Emerging 3 Major Causes Of The Crash Of The Gold and Silver Prices

The collapse of gold and silver prices was due to three main reasons, according to market analysts:

1. Easing Geopolitical Risk Reduces Safe-Haven Demand

Gold and silver also lost support as geopolitical tensions showed signs of cooling. Iran and the U.S. confirmed they will hold talks in Oman on Friday, a development that helped reduce uncertainty around nuclear tensions. This reduced safe-haven demand that had supported bullion prices in recent weeks.

Kunal Shah, head of research at Nirmal Bang Commodities, said that if geopolitical risk and the de-dollarisation narrative temporarily fade, the upside momentum in metals becomes difficult to sustain.

2. Stronger Dollar Pressures Bullion

The U.S. dollar surged to a near two-week high, making gold and silver more expensive for non-dollar investors and reducing the attractiveness of bullion as a hedge.

Tim Waterer, chief market analyst at KCM, said the dollar gained renewed strength following Kevin Warsh’s nomination as Federal Reserve chair, prompting traders to reassess the outlook for monetary policy. According to Waterer, the extreme volatility in gold has also made traders more cautious, weakening short-term confidence in bullion.

Market participants noted that Warsh is seen as favouring a smaller Fed balance sheet and a less aggressive stance on rate cuts. This perception strengthened expectations that U.S. interest rates may stay higher for longer, which tends to hurt non-yielding assets such as gold and silver.

3. Trump-Xi Call Boosts Risk Sentiment

The selloff in Asian markets was further accelerated after a phone call between U.S. President Donald Trump and Chinese President Xi Jinping, which helped calm fears of worsening global economic tensions.

Trump said the call was “very positive” and stated that his relationship with Xi remained “extremely good”. A Chinese government-linked account also quoted Xi as saying he attaches “great importance” to Sino-U.S. relations.

The discussion reportedly covered Taiwan and broader trade and security concerns. With both leaders signalling commitment to stable ties, investor demand for defensive assets weakened.

Christopher Wong, strategist at Oversea-Chinese Banking Corp., said the market reaction created a feedback loop, amplified by thin liquidity, with sentiment turning weaker across asset classes, including metals and equities.

What Does This Mean For Investors?

The sharp decline in gold and silver highlights the risk of high volatility after a strong multi-month rally, especially when global sentiment shifts quickly amid currency strength and easing geopolitical concerns.

Even though other analysts view the correction as a long-term accumulation area at major support levels, others foresee an additional decline in silver in the near future. As the prices of bullion move wildly after doubling in the past year, the investor must monitor the trend of the dollar, the Fed policy signals, and the general risk sentiment in the world before taking up even more.

Source

Economictimes