After a stellar rally in recent weeks, the precious metals market experienced a sharp pullback on Friday, with both gold and silver prices declining steeply on the Multi Commodity Exchange (MCX). The decline was largely attributed to profit-taking and easing geopolitical and economic concerns, prompting investors to book gains after a historic run-up.
Price Movement on MCX
Gold prices of 24 karat purity, which recently hit an all-time high of ₹1,32,294 per 10 grams, dropped nearly 3% to ₹1,25,957 per 10 grams.
Silver witnessed an even deeper correction, plunging over 8% from ₹1,70,415 per kg to ₹1,53,929 per kg, marking one of its steepest single-day declines in recent months.
Analysts View the Correction as Healthy
Market experts believe this downturn is a natural and necessary correction following the extraordinary rally.
Ajay Bagga, a Banking and Market Expert, described Friday’s price drop as a “tactical retreat” driven by short-term sentiment shifts and profit-taking.
“The strategic case for gold and silver remains highly compelling, supported by global de-dollarization, persistent silver supply deficits, central bank buying, and an environment of low real interest rates and heightened geopolitical risk,”
— Ajay Bagga, Banking and Market Expert
Bagga noted that easing global tensions also contributed to the pullback. He highlighted U.S. President Donald Trump’s conciliatory remarks on proposed tariffs on China, which briefly reduced geopolitical uncertainty and weakened safe-haven demand for precious metals.
Despite the drop, Bagga remains optimistic about the long-term outlook for both metals, suggesting that investors should treat the correction as a buying opportunity. He added that silver’s outlook is particularly strong, given its dual role as a precious and industrial metal, vital to the green energy and electronics sectors.
“Given the recent speculative frenzy and physical market dislocation, traders must remain cautious. However, the long-term trend remains upward, supported by industrial growth,” he said.
MCX and Its Role in Commodity Trading
The Multi Commodity Exchange of India (MCX), India’s first listed electronic commodity derivatives platform, enables online trading in futures and options of commodities such as gold, silver, and energy products. Functioning similarly to stock exchanges like BSE and NSE, MCX serves as a crucial hub for price discovery in the commodities market.
Market Reaction and Expert Insight
Echoing Bagga’s views, Ajay Kedia, Founder and Director of Kedia Commodities, said that the sudden price correction was inevitable after a two-month surge.
“Just as we witnessed a parabolic rise in the last two months, this correction was overdue. From August till now, we’ve seen the biggest rally in nine weeks — a one-sided surge,”
— Ajay Kedia, Kedia Commodities
Conclusion:
While the short-term volatility has rattled traders, analysts remain confident that the underlying fundamentals for gold and silver remain strong. Structural factors such as central bank accumulation, industrial demand for silver, and macroeconomic uncertainty continue to support a bullish long-term trajectory. For long-term investors, this correction may represent a timely opportunity to accumulate positions in precious metals at relatively lower levels.