Gold and silver prices are undergoing a deep correction due to hectic profit booking amid an increase in CME precious metals margin requirements, the dollar’s rise, and easing geopolitical tensions. Stellar gains since last year drove gold and silver rates to unprecedented levels, causing demand fatigue and profit booking.
Gold rate on MCX (February futures) has crashed by over ₹₹47,000, or 26%, per 10 grams from its peak. On the other hand, MCX silver March futures have seen a massive drop of ₹1.94 lakh, or over 46%, per kg from their peak.
Why are gold and silver prices falling?
The main trigger behind the sharp sell-off in gold and silver prices is concerns over hikes in margin requirements by the CME, which experts fear will reduce liquidity and dampen speculative trade.
For gold futures, margins will increase from 6% to 8% for non-heightened risk positions, while for heightened risk positions, margins will rise from 6.6% to 8.8%.
For silver futures, margins for non-heightened risk positions will be increased to 15% from 11%, while margins for heightened risk positions will go up to 16.5% from 12.1%.
The dollar’s rise against its peers also contributed to the trend of investors taking money off the table. The dollar index is trading above 97 after US President Donald Trump nominated Kevin Warsh to be the next Federal Reserve chair. While Trump claimed that Warsh is keen to reduce interest rates, the market perceived him as hawkish on interest-rate policy.
Is it the right time to buy gold, silver? Experts say, yes
A strong sell-off in gold and silver has raised speculations about whether it is time to buy precious metals or stay away.
Prices are expected to remain volatile, and experts suggest short-term traders should stay on the sidelines. Those who want to hold gold and silver for the long term can accumulate on dips.
“Overall, the current level is a very good level to start accumulation. Comex gold may find support near $4,550 per troy ounce and rebound soon. We expect MCX gold to settle around ₹₹1,35,000 per 10 grams. From there, we may experience a new wave of the rally in the bullion,” said Jigar Trivedi, Senior Research Analyst at IndusInd Securities.
But why are experts so confident about the long-term trend of gold and silver?
Experts highlight a few fundamental factors that will continue driving gold and silver prices higher despite intermittent corrections.
Fundamentals remain intact
Experts underscore that investors should look past the headlines and understand how these metals function within a market cycle. They say, unlike the past when inflation or speculative excess drove the prices, today’s rally is rooted in deeper macro and monetary realignments.
Precious metals are driven by supply and demand, unlike equities, which are dependent on fundamentals such as earnings or cash flow.
Manish Srivastava, Executive Director for Anand Rathi Wealth Limited, highlighted that gold acts as a barometer for global uncertainty, moving based on geopolitical tension, central bank activity and interest rate fluctuations. Silver is more dependent on industrial demand and speculation, making it highly sensitive to economic shifts.
The pursuit of de-dollarisation
Anindya Banerjee, the head of currency and commodity research at Kotak Securities, sees a larger monetary reset underway and gold reclaiming the reserve-currency premium.
“Rapid de-dollarisation and de-globalisation are dismantling the post-Bretton Woods monetary order. This is a repricing of money itself. Gold and silver—the original, time-tested forms of money—are reclaiming the reserve-currency premium long monopolized by fiat currencies, most notably the US dollar,” said Banerjee.
“We classify the current phase as stage one of dollar devaluation, where gold and silver rise aggressively in dollar terms. This phase is likely to coincide with rising stress fractures across the US economy and financial system over the next 12–24 months,” Banerjee explained.
“Stage two would involve the dollar losing purchasing power not just against gold, but also against BRICS+ currencies, including the Indian rupee itself. In this context, the upcoming BRICS summit in India this August is not a routine diplomatic event—it is a macro signal worth watching closely,” said Banerjee.
Silver is an indispensable industrial input.
Banerjee pointed out that the market is already in structural deficit, and silver sits at the epicenter of three unstoppable forces shaping the modern economy: green energy, electrification, and electronics. Few assets combine monetary insurance with industrial scarcity the way silver does.
Riya Singh, a research analyst for commodities and currency at Emkay Global Financial Services, pointed out that structural supply deficits, shrinking above-ground stocks, and robust industrial demand, especially from energy transition and electronics, have tightened the silver market materially.
Silver is also benefiting from substitution demand as investors look for a lower-priced alternative to gold.
Should investors increase exposure to gold and silver?
Typically, wealth managers and experts recommend keeping precious metals at 10-15% in one’s portfolio. However, the sharp rise in these metals over the last year has challenged this conventional practice.
Still, most experts say gold cannot replace equities.
According to Srivastava, since 1997, gold has mostly outperformed fixed deposits, proving its worth as a store of value. However, it has not matched equity returns, where markets have delivered over 10% returns in nearly all cases.
“This confirms that gold is a defensive asset rather than a growth asset, and works best as a substitute for the debt allocation in the portfolio, not as a replacement for equity, which is the true growth asset. Silver has struggled to consistently beat either equity or gold over ten-year periods,” said Srivastava.
For Indian investors, there is an additional and powerful layer at work: the rupee depreciation.
Banerjee highlighted that the rupee depreciation premium is being steadily accumulated into gold and silver prices, magnifying returns far beyond what investors are seeing in many other parts of the world. This currency tailwind has materially boosted domestic bullion returns.
However, Banerjee added, when the rupee eventually enters an appreciation phase against the US dollar, this premium can partially unwind. That may compress returns over the medium term—but it will not eliminate them. The structural bull case remains firmly intact.
Read more stories by Nishant Kumar
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
