Gold-Silver Crash: What Should Investors Do Amid Market Turmoil?

The recent plunge in gold and silver prices has left investors concerned. On the Multi Commodity Exchange (MCX) today, silver futures dropped nearly ₹40,000 per kilogram in a single session, while gold fell over ₹10,000 per 10 grams. This sudden volatility raises the question: is this an opportunity for investors, or a signal to exercise caution? Experts weigh in.

Sharp Decline Across Markets

Over the past few days, precious metals have seen significant losses. Gold has dropped by nearly 19% against the US dollar, while silver has fallen up to 40% from its recent highs. Indian equity markets have also witnessed a decline, with Sensex and Nifty down approximately 5% in 2026 so far. Analysts attribute this downturn to foreign investor sell-offs and rising geopolitical tensions.

Turmoil on the MCX

On Monday, 2 February 2026, the MCX witnessed extreme volatility. April gold futures plunged 6% to ₹1,38,888 per 10 grams, while silver hit a 12% lower circuit, losing around ₹40,000 per kilogram in a single trading session. Silver had reached a record high of ₹4 lakh per kilogram last Thursday, but has now fallen to ₹2.25 lakh. This rapid profit booking in precious metals has left investors reassessing their portfolios, which are typically considered safe havens.

Trigger Behind the Fall

The sell-off began last Friday following news that US President Donald Trump’s preferred choice for Federal Reserve Chairman is former Fed Governor Kevin Warsh, replacing Jerome Powell when his term ends on 15 May. Warsh is seen as a strong advocate of a firm monetary policy and a robust US dollar. Markets immediately priced in expectations of tighter monetary policy, leading to a sharp drop in demand for traditionally safe assets like gold and silver.

Additional Factors

The decline was further exacerbated by a stronger US dollar, rising treasury yields, and higher-than-expected US inflation data (PPI and Core PPI). In India, the absence of any change in import duties in the Union Budget removed a key support for domestic gold prices. Furthermore, the Chicago Mercantile Exchange (CME) raised margin requirements for gold and silver, forcing leveraged traders to liquidate positions, which accelerated the fall.

Is It the Right Time to Buy?

Sriram B K R, Senior Investment Strategist at Geojit Financial Services, advises caution. He states:
“Prices are still at elevated levels. They may sustain if supported by durable fundamental factors, but current signals are mixed. Global tensions and uncertainty may support gold as long as they persist. Both asset classes appear ready for price consolidation, but timing such moves is challenging. Investors should avoid chasing recent rallies and maintain disciplined asset allocation. Exercise caution at current levels.”

ICICI Prudential AMC CEO S. Naren also cautions investors on precious metals:
“Gold and silver have historically offered strong returns. However, standalone allocations should be approached carefully.”

Disclaimer: The views expressed in this article are those of individual analysts and brokerage firms, not NBT. Investors are advised to consult certified financial experts before making any investment decisions, as commodity and equity market conditions can change rapidly.