Gold, Silver Extend Losses: Why Metals Are Under Pressure

Gold and silver prices continued to slide on Friday, February 6, extending losses after a brief mid-week rebound. What initially looked like a healthy pullback has now turned into a deeper correction, driven by a stronger US dollar, weak global equity markets, and a renewed shift towards risk-off sentiment.

For Indian investors, the fall in precious metals is more than just a global headline. Gold and silver play a critical role in portfolios, jewellery demand, and commodity trading strategies. Understanding why metals are under pressure helps investors decide whether this is a temporary phase or a signal to reassess allocations.

Quick Snapshot

• Gold slipped below $4,740 per ounce after sharp losses earlier in the week
• Silver remained highly volatile after a steep single-day crash
• A stronger US dollar and weak global equities weighed on bullion
• Rate cut expectations alone were not enough to support metals

What Is Happening to Gold and Silver Prices?

In early Asian trade, spot gold fell around 0.7 percent to $4,735.99 per ounce, following a near 4 percent plunge a day earlier. US gold futures for April delivery also weakened, pointing to continued selling pressure across international markets.

Silver saw even sharper moves. Spot silver dropped over 3 percent to around $68.97 per ounce, coming on the heels of a dramatic 19 percent crash in the previous session. Prices had briefly slipped below the $65 mark earlier, hitting a more than one-and-a-half-month low before stabilising marginally.

This sharp divergence in price action highlights how fragile sentiment around precious metals has become.

Why Metals Are Under Pressure Globally

Risk-Off Sentiment Dominates Markets

The latest sell-off in metals is closely linked to broader financial market stress.

Global equity markets, particularly technology stocks, saw heavy selling as investors reassessed the rising costs and earnings visibility of artificial intelligence-led investments. MSCI’s world equity index dropped more than 1 percent, triggering a classic risk-off response.

In such environments, investors often cut exposure to commodities and rotate towards cash and the US dollar.

Stronger US Dollar Hurts Bullion

The US dollar climbed to a two-week high as demand for safety increased. Since gold and silver are priced in dollars, a stronger greenback makes them more expensive for non-US buyers, dampening global demand.

This currency effect has been one of the strongest headwinds for precious metals over the past few sessions, overpowering other supportive factors.

Weak Labour Data Did Not Help Gold Yet

Normally, weaker US economic data supports gold. The latest JOLTS report showed job openings falling sharply to the lowest level since September 2020, reinforcing expectations of Federal Reserve rate cuts in 2026.

Markets are now pricing in at least two rate cuts next year, with the first possibly as early as June. Lower interest rates usually benefit gold because it does not offer interest income.

However, in the current environment, softer yields failed to offset the pressure from the stronger dollar and equity market volatility.

Geopolitical Risks Are Not Escalating

Geopolitical tensions remain present but have not intensified enough to trigger fresh safe-haven buying.

The White House reiterated that diplomacy remains the preferred route in dealing with Iran, even though military options remain on the table. This cautious but non-alarming stance has kept markets watchful rather than fearful, limiting safe-haven flows into gold.

Why Silver Is Falling Faster Than Gold

Silver’s losses have been steeper due to its dual role as both a precious and industrial metal.

A slowdown in global growth expectations impacts industrial demand for silver, especially in electronics and manufacturing. At the same time, silver markets often carry higher speculative positions, making prices more vulnerable during periods of forced selling.

Margin-related liquidations and higher volatility amplify silver’s moves compared to gold, which is still seen primarily as a store of value.

Impact on Indian Markets and Investors

Gold Prices in India

For Indian consumers, falling international gold prices can offer some relief, especially ahead of the wedding season. However, domestic prices also depend on the rupee’s movement. A weaker rupee can offset gains from global price declines.

Jewellery demand may see a gradual pickup if price stability returns, though sharp volatility tends to delay buying decisions.

Silver and Industrial Demand

India’s silver demand is increasingly linked to industrial usage, including electronics and renewable energy. Sustained weakness in prices could support long-term consumption, but short-term volatility may keep traders cautious.

Equity Market Linkages

Metal price corrections also influence metal stocks, commodity funds, and broader market sentiment. Investors exposed to gold ETFs or silver-linked instruments should be prepared for continued swings.

Is This a Buying Opportunity or a Warning?

Corrections in precious metals are not unusual, especially after strong rallies. The current decline reflects a mix of technical unwinding and macro-driven risk aversion rather than a collapse in long-term fundamentals.

Central bank buying, portfolio diversification needs, and global uncertainty still support gold’s structural relevance. However, timing entries becomes crucial in volatile phases.

This is where disciplined investing and quality research matter. Platforms like Swastika Investmart help investors navigate such conditions with SEBI-registered credibility, strong research tools, technology-enabled trading platforms, and a focus on investor education. Rather than reacting to daily price moves, investors can take informed, goal-based decisions.

Frequently Asked Questions

Why are gold and silver prices falling despite rate cut expectations?
The stronger US dollar and risk-off sentiment are currently outweighing the positive impact of potential rate cuts.

Why is silver more volatile than gold?
Silver has higher industrial exposure and speculative participation, making it more sensitive during market sell-offs.

Does a stronger dollar always hurt gold prices?
Generally yes, because it makes gold more expensive for global buyers, reducing demand.

How does this impact Indian investors?
Lower global prices may support jewellery demand, but currency movements and volatility remain key factors.

Should investors buy gold during this correction?
Investors should consider staggered investments rather than lump-sum buying, keeping long-term goals in mind.

Final Thoughts

The recent slide in gold and silver prices reflects a market grappling with risk aversion, currency strength, and shifting expectations. While short-term pressure remains, precious metals continue to hold strategic importance in diversified portfolios.

For investors looking to track commodities, equities, and macro trends with clarity, having access to reliable insights and research-backed guidance makes all the difference.

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