Gold rebounds from crash while silver’s rout deepens — what’s next?

Gold staged a dramatic turnaround in domestic futures trade on Monday (Februray 2), recovering sharply after an early crash that triggered the lower circuit, even as silver remained under heavy pressure for a third straight session.

Market participants say the wild swings reflect a much-needed correction after months of relentless gains rather than a reversal of the broader bullish trend.

On the Multi Commodity Exchange (MCX), April gold futures opened weak and plunged as much as ₹10,688 — a steep 7.2% — to an intraday low of ₹1.37 lakh per 10 grams, breaching the exchange’s lower circuit in early trade.

However, the sell-off proved short-lived. Buying interest quickly emerged at lower levels, helping gold erase all its losses and turn positive. By afternoon trade, the contract was up ₹259, or 0.18%, at ₹1.48 lakh per 10 grams, with volumes of 8,501 lots.

Silver, in contrast, failed to find similar support. MCX silver futures slid ₹39,847, or nearly 15%, to hit a lower circuit of ₹2.25 lakh per kg in early deals. Though prices later trimmed losses, silver was still down 5.8% at ₹2.50 lakh per kg in 6,892 lots — marking its third day of steep declines.

Global cues remain mixed

Overseas, Comex gold for April edged higher by 0.11% to $4,750.31 an ounce, while silver for March jumped 4.24% to $81.86 an ounce, indicating that domestic turbulence was sharper than moves in global markets.

What explains the rollercoaster?

According to NS Ramaswamy, Head of Commodity & CRM at Ventura, the recent pullback is a natural “shakeout” after gold and silver surged to overextended levels.

He notes that while the dollar rebound triggered some selling, the structural bull case for gold remains intact, backed by central bank buying, geopolitical risks, and portfolio diversification demand.

Central banks purchased about 230 tonnes of gold in Q4 2025, and buying is expected to exceed 800 tonnes in 2026, providing a strong fundamental floor to prices.

Ramaswamy believes gold could eventually surpass its recent futures high of $5,645 in 2026, once the current bout of volatility settles.

Silver’s correction has been deeper, largely due to higher margin requirements forcing leveraged traders to unwind positions. He expects silver to trade broadly between $72–$78, with a decisive breakout only if prices sustainably move above $80.

‘Down, but not out’

Apurva Sheth of SAMCO Securities says that despite the sharp swings, the long-term trend in gold remains upward.

While some commentators blame fears of tighter US monetary policy or simple profit-booking, Sheth argues that price action tells a more constructive story.

Gold continues to form higher highs and higher lows, and key breakout levels are holding — suggesting that “strong hands” are still accumulating on dips.

He expects a phase of time-wise consolidation, with gold likely trading in a broad band between roughly ₹1.32 lakh–₹1.80lakh per 10 grams in coming months.

Such a range-bound period, he says, would be healthy rather than bearish — allowing excess speculation to cool while preserving the broader uptrend.

-With PTI inputs