Bullion markets witnessed a sharp correction on January 31, with MCX silver plunging nearly 27% to slip below ₹3 lakh, while gold prices fell to around ₹1.5 lakh, triggering intense discussion among investors and traders. The sudden decline comes after weeks of relentless rallies that had pushed precious metals to record highs, driven by global uncertainty, geopolitical tensions, and expectations of interest rate cuts by major central banks.
On the Multi Commodity Exchange (MCX), silver recorded one of its steepest single-phase corrections in recent memory. After touching historic highs earlier this month, profit-booking accelerated as prices breached key technical support levels. Analysts say silver’s sharp fall was amplified by its dual role as both a precious and industrial metal, making it more sensitive to shifts in global growth outlook and currency movements.
Gold, though relatively more stable, also saw a notable pullback. Prices eased to around ₹1.5 lakh per 10 grams, retreating from record levels reached earlier in January. Market experts attribute the decline to a combination of profit-taking, a stronger dollar in global markets, and easing safe-haven demand following temporary calm in geopolitical developments.
Internationally, spot gold prices slipped as bond yields firmed, reducing the appeal of non-yielding assets like gold. Meanwhile, silver prices mirrored weakness seen in base metals, as concerns over global manufacturing demand resurfaced. The correction was further supported by reports of increased selling from institutional investors who had built heavy long positions during the rally.
In the domestic market, jewellers and bullion traders are closely watching the price movement. While the sudden fall has dampened short-term sentiment, many in the industry see this correction as healthy and overdue. “Prices had run up too fast in a short span. This correction could bring stability and fresh buying interest, especially ahead of the wedding season,” said a Mumbai-based bullion dealer.
Retail investors, who had stayed cautious during the sharp rise, may now find an opportunity to re-enter the market. However, experts advise caution, warning that volatility is likely to remain high. Factors such as global inflation data, US Federal Reserve commentary, crude oil prices, and geopolitical developments will continue to influence bullion prices in the near term.
Silver’s sharp decline has particularly caught attention due to its scale. Despite the fall, analysts maintain a constructive medium- to long-term outlook, citing demand from renewable energy, electric vehicles, and electronics. Gold, meanwhile, continues to be supported by central bank buying and long-term hedging demand, even as short-term fluctuations persist.
For now, market participants are adopting a wait-and-watch approach. Traders are closely tracking global cues, while investors are reassessing their strategies amid heightened volatility. As January draws to a close, the bullion market has delivered a clear reminder that even traditional safe-haven assets are not immune to sharp corrections after extended rallies.
