Gold and silver markets are expected to remain volatile in the near term after one of the most extreme boom-and-bust episodes in recent history, even as the broader long-term outlook for precious metals continues to remain constructive, according to market participants and analysts.
After a parabolic rally through, both gold and silver witnessed a violent correction that erased a significant portion of recent gains. Data compiled by Mirae Asset shows silver correcting more than 40% from its peak, while gold fell over 20% from record highs — among the sharpest drawdowns seen in decades. Despite the intensity of the sell-off, both metals remain positive on a year-to-date basis, highlighting the strength of the underlying uptrend that had built over the past year.
The rally that preceded the correction was driven by a confluence of factors, including heightened geopolitical uncertainty, fiscal concerns in developed economies, sustained central-bank buying and strong ETF inflows, which together provided structural support to gold. Silver, however, moved well beyond these fundamentals. As speculative participation surged, the metal increasingly behaved like a leveraged proxy for risk appetite rather than a traditional hedge, making it more vulnerable to sharp reversals.
The trigger for the sell-off came as expectations around US monetary policy shifted. A reassessment of the US dollar outlook, combined with higher margin requirements across global derivatives exchanges, led to a rapid and disorderly unwinding of crowded trades. Stop-losses and margin calls accelerated the decline, while thinning liquidity amplified price swings. ETF flows played a critical role in transmitting selling pressure, particularly in silver, where trading volumes surged amid the exit by fast-money participants.
Looking ahead, analysts expect gold and silver to diverge in performance. Gold’s long-term investment thesis, anchored in central-bank diversification, geopolitical hedging and concerns around fiscal sustainability, remains largely intact. Once excess leverage is flushed out and selling pressure eases, gold is expected to find firmer footing. Analysts also point to the likelihood of dip-buying returning ahead of seasonal demand, including buying linked to the Lunar New Year.
Silver’s outlook is more nuanced. Its smaller market size and heavier dependence on speculative flows make it inherently more volatile. While the sharp correction has broken the perception of a one-way trade, it may also help normalise physical availability, particularly in key consuming regions such as China. However, after the scale of the recent collapse, investors are expected to remain cautious in the near term, with risk appetite likely to rebuild gradually.
Overall, the recent reset is widely seen as healthy for the precious-metals complex, though analysts caution that sharp price swings are likely to persist. In an environment of heightened global uncertainty, gold is viewed as offering a more favourable risk-reward profile than silver, with a balanced gold–silver allocation preferred for long-term investors.
What SAMCO Securities says about gold
Gold, which had been sliding over the past few sessions, rebounded in early trade on Tuesday, February 3. However, analysts at SAMCO Securities say the move should be seen as part of a broader consolidation phase rather than a decisive trend reversal. After a sharp multi-month rally, gold prices had corrected meaningfully in recent days, raising concerns among some investors that the bull run was losing momentum. Tuesday’s rebound, they said, reflected bargain buying and short-covering following the sell-off.
According to Apurva Sheth, Head of Market Perspectives and Research at SAMCO Securities, the recent decline was driven more by positioning and profit-booking than by any deterioration in underlying fundamentals. SAMCO noted that gold’s long-term price structure remains intact, with higher highs and higher lows still visible on charts and key breakout levels largely holding.
What SAMCO expects next
SAMCO expects gold to enter a time-wise consolidation phase over the coming months rather than resume a straight-line rally or slip into a prolonged downturn. The brokerage sees gold trading in a broad range, with resistance near ₹1,80,779 and support in the ₹1,36,185–₹1,32,294 zone. Such sideways movement, it said, is typical after sharp rallies and helps cool excess optimism while allowing market positioning to reset.
While short-term volatility is likely to persist, SAMCO maintains that the bigger picture for gold remains positive as long as key supports hold, supported by central-bank buying, geopolitical risks and steady physical demand.