Gold, silver outlook: Rebound in play, but experts say volatility likely to linger

Gold and silver are showing early signs of stabilisation after last week’s historic sell-off, but market participants and analysts caution that the recovery is likely to be uneven, with bouts of volatility persisting in the near term.

After steep declines that saw gold drop more than 15% and silver slide over 30% in two sessions, both metals have staged a sharp rebound. Spot gold has risen around 5% from recent lows, while silver has recovered roughly 8%, reflecting a mix of bargain buying, short-covering, and technical retracement.

Macro forces pulling bullion in two directions

According to Ross Maxwell, Global Strategy Operations Lead at VT Markets, the recent US–India trade deal — which cut tariffs on Indian goods from 50% to about 18% — could improve global risk sentiment and ease supply-chain frictions.

He noted that better trade conditions may reduce fear-driven demand for gold, potentially limiting upside moves. However, he added that gold remains well supported by concerns around inflation, currency stability, and geopolitical risks, keeping it attractive as a strategic hedge rather than just a trading instrument.

For silver, Maxwell said stronger global trade and manufacturing activity could provide incremental support due to its industrial usage, even as its safe-haven appeal remains secondary to gold.

Has the sell-off changed the trend?

Hareesh V, Head of Commodity Research at Geojit Investments, said the recent correction was driven more by short-term catalysts — including margin hikes, a stronger US dollar, and repositioning linked to the potential appointment of a more hawkish Federal Reserve chair — rather than a breakdown in long-term fundamentals.

He expects choppy trading ahead, with a gradual recovery possible as leverage unwinds. However, he warned that fresh liquidation risks could emerge if prices breach last week’s lows, which now act as key technical supports.

Technical view: Cautious optimism

From a chart perspective, Aamir Makda of Choice Broking highlighted that gold has rebounded roughly 12% from its recent bottom near ₹1.37 lakh per 10 grams and is now trading close to ₹1.53 lakh per 10 grams.

He sees immediate resistance around ₹1.54 lakh per grams. A sustained breakout above this level could push prices toward ₹1.60 lakh–₹1.67 lakh per 10 grams. On the downside, last week’s lows remain critical support.

In silver, Makda pointed out that prices have recovered from a trough near ₹2.25 lakh per kg to around ₹2.69 lakh per kg.

Why the crash happened — and why the rebound followed

Kaynat Chainwala, AVP–Commodity Research at Kotak Securities, said last week’s plunge was triggered by a stronger US dollar, firmer Treasury yields, and a shift toward a more hawkish Fed outlook following news around the potential nomination of Kevin Warsh.

She also cited the sharp jump in the ISM manufacturing index to 52.6 in January — its first expansion in over two years — which led traders to scale back expectations of early rate cuts.

Chainwala added that higher margin requirements on major exchanges amplified the sell-off, forcing leveraged traders to unwind positions rapidly.

Gold vs silver: Different paths ahead

Most analysts agree that gold appears better positioned in the current environment due to steady central bank purchases, persistent geopolitical risks, and structural demand from ETFs and investors.

Silver, however, faces a more uncertain path. Its earlier rally was heavily speculative, and the recent crash has broken the perception of a “one-way trade.” While improving global trade could support industrial demand, investor caution is likely to linger.