Gold & Silver Volatility: Record Highs, Sharp Falls, and What's Next for 2026

Introduction

Gold and silver markets are currently navigating a period of heightened volatility following a blistering rally that pushed prices to unprecedented highs. Investors are now contending with sharp corrections driven by profit-booking, a stronger US dollar, and uncertainty surrounding future interest rate cuts by the US Federal Reserve. Geopolitical developments, particularly in Venezuela, have added another layer of complexity, bolstering safe-haven demand while macroeconomic indicators pull sentiment in the opposite direction. This dynamic has created a divided outlook among analysts, with some calling for continued bullish momentum while others advise caution in the short term.

Record Highs and Sharp Corrections

The precious metals market witnessed extraordinary price action in late 2025. On the Multi Commodity Exchange (MCX), gold futures surged to a lifetime high of ₹1,40,444 per 10 grams before experiencing a significant pullback. The price fell by ₹4,112, or 2.94%, in a single week to settle at ₹1,35,761. This correction was largely attributed to profit-taking at elevated levels amid thin liquidity during the year-end holiday season.

Silver's trajectory was even more dramatic. After reaching a record peak of ₹2,54,174 per kg on the MCX, prices tumbled by ₹17,858, or over 7%, to close the week at ₹2,36,316 per kg. The international markets reflected a similar trend. Comex gold futures declined by 4.9% to $1,329.6 per ounce, while silver plunged 8% to settle at $11.01 per ounce after briefly touching a high of $12.67.

Key Drivers of Market Volatility

Several conflicting factors are contributing to the current price swings. On one hand, rising geopolitical tensions, highlighted by the capture of Venezuelan President Nicolas Maduro by US forces, have stoked fears of global market instability. This event has increased the appeal of gold and silver as safe-haven assets and raised concerns about potential disruptions to crude oil supplies, given Venezuela's vast reserves.

On the other hand, macroeconomic factors are exerting downward pressure. A stronger US dollar makes bullion more expensive for holders of other currencies. Furthermore, hawkish commentary from US Federal Reserve officials has tempered expectations for imminent interest rate cuts, reducing the attractiveness of non-yielding assets like gold. Market participants are now closely watching key US economic indicators, including ISM Manufacturing data and employment figures, for clues on the Fed's next move.

A Divided Expert Outlook

Financial analysts are split on the near-term direction of precious metals. Some experts maintain a bullish stance, viewing the recent dip as a buying opportunity.

Abhilash Koikkara, Head of Forex & Commodities at Nuvama Professional Clients Group, believes the broader trend remains positive. He suggests a target of ₹1,40,000 for MCX Gold, with a crucial support level at ₹1,32,000. For silver, he projects a potential advance towards ₹2,60,000, as long as prices hold above the ₹2,21,000 support zone.

Conversely, other analysts advise a more cautious approach. Jateen Trivedi of LKP Securities recommends a "sell on rise" strategy for gold, citing weakening technical indicators like a bearish MACD crossover. His analysis suggests selling near the ₹1,30,400 level with a potential downside target of ₹1,29,000.

Silver's Unique Position

Silver has consistently outperformed gold, driven by a combination of investment and industrial demand. The metal has delivered remarkable returns, with some analyses showing a 256% gain over five years, significantly outpacing both gold and the Nifty index. This surge is supported by its critical role in high-growth industries, particularly solar panel manufacturing and electronics.

The Indian government's decision in 2024 to cut the import duty on silver from 15% to 6% provided a significant boost to the market. This policy change, combined with the launch of Silver Exchange Traded Products (ETPs) in 2022, has expanded the investor base and improved accessibility. The Silver Institute projects a fifth consecutive structural deficit in 2025, suggesting that strong industrial demand may continue to support prices.

| Asset Performance (Multi-Year) | | :--- | :---: | | Asset Class | 3-Year Return | | Silver | 206% | | Gold | 143% | | Nifty | 46% |

The Rupee's Role in Domestic Pricing

For Indian investors, the USD/INR exchange rate is a critical factor that can amplify global price movements. A weaker rupee mechanically lifts the domestic price of gold and silver, even if international prices remain flat. For instance, a 2% depreciation in the rupee can lead to an approximate 2% increase in the domestic gold price, before taxes and premiums. This dynamic often makes rallies feel more pronounced in the Indian market.

Conclusion and Forward Outlook

The precious metals market stands at a critical juncture. While the long-term bullish case remains supported by central bank buying, persistent geopolitical risks, and expectations of an eventual monetary easing cycle, the short-term outlook is clouded by uncertainty. The recent correction highlights the market's sensitivity to profit-taking and shifts in macroeconomic sentiment.

Investors will be closely monitoring upcoming US inflation data and commentary from Federal Reserve officials, as these will be pivotal in shaping interest rate expectations. While the historic rally may have paused, the underlying drivers that propelled gold and silver to record highs have not disappeared, suggesting that volatility will remain a key feature of the market in 2026.