Gold Silver Prices Slide Sharply After Profit Booking, Strong Dollar Boost

Gold silver prices witnessed a sharp weekly correction after aggressive profit booking and a stronger US dollar rattled precious metal markets. The sell-off followed a historic rally that had pushed bullion to record levels earlier this month.

The decline was triggered after US President Donald Trump nominated Kevin Warsh as the next Federal Reserve chair. Markets interpreted the move as hawkish, strengthening the dollar and pressuring non-yielding assets such as gold and silver.

Gold Silver Prices See Heavy Weekly Losses Across Markets

Gold silver prices recorded one of the steepest weekly declines in recent years on Indian commodity exchanges. MCX gold February futures dropped around nine percent by the end of the week. Silver futures for March delivery plunged as much as twenty-five percent during the same period.

According to data released by the India Bullion and Jewellers Association, domestic spot prices also reflected the sharp correction. The price of 24-carat gold per 10 grams slipped significantly from the previous session’s close. Silver prices per kilogram also saw deep losses as leveraged positions were unwound.

Market participants attributed the move to aggressive profit booking after an unprecedented rally in precious metals. Traders who had accumulated large positions during the recent surge moved quickly to lock in gains once global cues turned unfavourable. The sharp fall was amplified by high leverage in silver contracts.

The nomination of Kevin Warsh as Federal Reserve chair played a central role in shifting sentiment. Analysts noted that Warsh is known for his firm stance on inflation control and support for central bank independence. Expectations of fewer interest rate cuts pushed US bond yields higher and lifted the dollar index.

A stronger dollar typically weighs on gold silver prices, as both metals are priced in US currency and offer no yield. Rising real yields further reduced the appeal of holding bullion in the short term.

Market View on Correction and Long-Term Outlook

Despite the steep fall, analysts stressed that the correction does not indicate a structural reversal in precious metals. Market watchers described the move as a classic liquidation phase following an extended period of euphoria. Overextended speculative positions were flushed out rapidly once momentum turned.

Several analysts told Reuters that the sell-off was driven by short-term positioning rather than a change in long-term fundamentals. Central bank gold purchases remain strong, providing a key support pillar for bullion demand. Silver continues to benefit from industrial usage across clean energy, electric vehicles, artificial intelligence, and electronics manufacturing.

Industry experts said the correction has helped reset overheated technical indicators. Excess leverage and speculative froth were reduced, creating a healthier base for future price discovery. In silver, analysts highlighted that sustained industrial demand could support prices once volatility eases.

Some traders believe that a period of consolidation may follow before fresh buying emerges. They added that stability in global interest rate expectations will be critical for the next directional move in gold silver prices.

Gold silver prices remain under near-term pressure, but analysts see the recent crash as a corrective phase rather than a breakdown. Long-term demand drivers and supply constraints continue to support the broader bullish narrative.

FYI (keeping you in the loop)-

Q1: Why did gold silver prices fall sharply this week?

Gold silver prices dropped due to aggressive profit booking and a stronger US dollar. The nomination of a hawkish Federal Reserve chair candidate also pushed yields higher.

Q2: Does the recent crash signal a long-term bear market?

Analysts say the fall reflects liquidation of overextended positions. Long-term fundamentals such as central bank demand and industrial usage remain intact.

Q3: How does a stronger dollar affect gold silver prices?

A stronger dollar makes gold and silver more expensive for global buyers. Higher real yields also reduce the appeal of non-yielding assets.

References

Reuters | Gold prices slide as dollar firms after Fed outlook shift | January 2026

Reuters | Silver tumbles as profit taking hits precious metals | January 2026

Associated Press | Strong dollar pressures gold after Fed signals | January 2026

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Readers should consult qualified professionals before making any investment decisions.