Gold, silver price crash: Should investors buy the dip?

After one of the sharpest sell-offs in decades, investors must be debating whether the recent plunge in gold and silver presents a buying opportunity or a warning to stay cautious.

Precious metals saw a brutal correction after touching record highs late January. On global markets, spot gold fell nearly 10% on Friday (January 30) — its biggest single-day drop since the early 1980s — while silver slumped over 27%, after falling

as much as 36% intraday. On the MCX, both metals opened down about 9% on Sunday (February 1) following the overseas rout.

In domestic trade, gold has recently been seen around ₹1.4 lakh per 10 grams on MCX, while silver traded near ₹2.74 lakh per kg.

What triggered the sell-off?

Analysts largely attribute the correction to a stronger US dollar and profit-booking after a parabolic rally. The dollar index rose following the nomination of Kevin Warsh as a potential Fed chair — seen as supportive of a strong dollar — which weighed on non-yielding assets like bullion.

“Prices had risen very quickly in a short period, making the market overheated. Expectations that the US Federal Reserve may remain hawkish or slow down rate cuts also reduced the appeal of gold and silver,” said Satish Dondapati, Fund Manager, Kotak Mutual Fund.

Weakness in equities also triggered selling across asset classes, including precious metals.

Is this a buying opportunity?

Views are mixed — and diverge sharply between gold and silver.

Bullish on gold, cautious on silver

Sandip Raichura, PL Capital, said that while volatility will persist, gold’s long-term fundamentals remain strong. He expects gold to trend higher over the next two years, potentially moving toward $6,000 an  ounce and eventually $8,000 per ounce in the medium term.

Silver, however, is a different story.

Raichura warned that it had become “severely overbought” and could see further downside, potentially finding support near $60 per ounce globally — still well above production costs but far below recent highs.

Staggered buying, not lump-sum

Given silver’s historically high volatility (25–35% annually), Rajkumar Subramanian, PL Wealth, advised calibrated, staggered allocations rather than lump-sum buying, to manage entry risk while retaining exposure to its structural demand drivers in solar, electronics and manufacturing.

“Don’t chase the rally” view

Gaurav Garg, Lemonn Markets Desk, described the pullback as a “healthy consolidation” rather than a trend reversal, but cautioned that high prices are already denting physical demand in India — suggesting near-term swings could continue.

Strong caution from WhiteOak Capital

WhiteOak Capital Mutual Fund, in its report “Gold is Talking, Silver is Screaming,”

took a more defensive stance.

It argued that when silver dramatically outperforms gold, it often signals a speculative peak rather than a sustainable trend.

Key takeaways from its note:

• The gold–silver ratio has compressed to around 46:1, far below its 10-year average near 80:1 — historically a warning sign for silver.


• At such levels, silver tends to correct faster and deeper than gold.


• Investors must book profits in silver first, rebalance portfolios, and redeploy gains into diversified equities rather than chase metals at record prices.


• It also highlighted that equities offer cash flows, dividends and a ₹1.25 lakh annual LTCG exemption — advantages physical gold and silver lack.