Gold Falls Over 6% to $4,140 and Silver Drops 9% Amid Dollar Strength and Profit Taking, Recovery Expected
Gold and silver prices have fallen sharply this week after their record-breaking rise slowed down. The strong rally that pushed both metals to new highs has now cooled, as traders started to take profits and the dollar gained strength.
Spot gold dropped more than 6% to around $4,140 per ounce after touching an all-time high earlier this month. Silver fell nearly 9% to about $48 per ounce, marking its biggest single-day fall in years. The pullback showed that the long rally in precious metals had likely gone too far, too fast.
Profit Taking and Strong Dollar Trigger Decline
Experts say the fall was mainly driven by profit-taking. Many investors sold their holdings after making big gains. Some technical charts also showed gold and silver were “overbought,” meaning prices had risen too quickly. That led to a wave of automated selling and cautious buying.
A stronger US dollar also hurt demand. When the dollar gets stronger, gold and silver become more expensive for global buyers, reducing interest. At the same time, easing worries about global tensions and improving talks between the US and China lowered the need for safe-haven assets like gold.
Analysts See Healthy Correction Ahead
Over the past few months, gold has gained almost 60% this year, while silver has risen more than 65% since August. Central banks and investors had been buying heavily to protect themselves from inflation and weaker currencies. But analysts now believe the prices need time to cool before the next move higher.
Citigroup and other global banks expect gold to settle near $4,000 per ounce for now. Some analysts said this is a healthy correction, not the start of a downtrend. They added that gold and silver could regain strength later, as central banks keep buying and inflation fears remain.
In India, gold futures on MCX were near Rs. 1.27 lakh per 10 grams, while silver traded around Rs. 1.54 lakh per kilogram after Diwali. Traders said demand eased slightly after the festive season, but long-term interest in precious metals stays strong.
Gold and silver’s sharp fall marks a pause in their long rally. The price reduction was a result of taking profits, a stronger dollar, and less anxiety worldwide. Nevertheless, the long-term forecast for the precious metals has not changed, and the demand of the investors will still be influenced by global uncertainties.