{"id":2515,"date":"2026-01-31T00:49:34","date_gmt":"2026-01-30T16:49:34","guid":{"rendered":"http:\/\/longzhuplatform.com\/?p=2515"},"modified":"2026-01-31T00:49:34","modified_gmt":"2026-01-30T16:49:34","slug":"silver-sinks-below-rs-3-5-lakh-gold-drops-rs-11000-as-bullion-rally-cracks-after-record-highs","status":"publish","type":"post","link":"http:\/\/longzhuplatform.com\/?p=2515","title":{"rendered":"Silver sinks below Rs 3.5 lakh, gold drops Rs 11,000 as bullion rally cracks after record highs\u00a0"},"content":{"rendered":"

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Gold and silver prices suffered one of their sharpest corrections in years on Friday, snapping a powerful rally that had pushed both metals to record highs and forcing investors to reassess near-term risk. Silver plunged nearly 17% to below \u20b93.5 lakh per kg on the MCX, while gold fell more than 7%, wiping out around \u20b911,000 per 10 grams. While the speed of the decline startled markets, analysts say the correction had been increasingly signalled by stretched valuations and rising volatility\u2014particularly in silver.<\/p>

According to a recent report by Motilal Oswal Financial Services (MOFSL), silver\u2019s exceptional outperformance over the past year may itself have become a warning signal. Silver prices have surged more than 200% over the last 12 months, sharply outperforming gold\u2019s roughly 80% rise and making silver one of the best-performing global assets. MOFSL cautioned that such sharp divergence historically precedes phases of consolidation or correction.<\/p>

Gold\u2013silver ratio<\/strong><\/p>

A key indicator highlighted in the report is the gold\u2013silver ratio, which measures how many ounces of silver are needed to buy one ounce of gold. Historically, the ratio averages around 65\u201370. During the Covid-19 shock in 2020, it spiked above 125, signalling extreme undervaluation of silver relative to gold and setting the stage for a powerful catch-up rally.<\/p>

That catch-up trade, MOFSL noted, has largely played out. The ratio has now compressed to around 50 and at times dipped below it. \u201cWhen the ratio falls to these levels, a large part of silver\u2019s re-rating is already behind us,\u201d the brokerage said, adding that silver is no longer cheap relative to gold, even if its long-term fundamentals remain constructive.<\/p>

Volatility gap widens<\/strong><\/p>

The report also underscored silver\u2019s significantly higher volatility. Since 2020, silver\u2019s annualised volatility has been nearly double that of gold, with wider daily swings and deeper drawdowns. Gold, by contrast, has continued to move in a more orderly, trend-driven manner.<\/p>

\u201cIn uncertain macro environments, risk-adjusted returns matter more than headline returns,\u201d MOFSL said. Silver may still offer upside, but it now carries disproportionately higher drawdown risk at current levels\u2014a reality that became evident in Friday\u2019s sharp sell-off.<\/p>

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Fundamentals remain strong<\/strong><\/p>

Despite the correction, commodity experts say silver\u2019s rally has been underpinned by strong fundamentals. Hareesh V, Head of Commodity Research at Geojit Investments Limited, said silver prices surged to record highs due to a potent mix of geopolitical shocks, supply deficits and a shift toward safe-haven assets.<\/p>

\u201cRecent escalation of geopolitical tensions\u2014such as U.S.\u2013EU tariff threats linked to Greenland\u2014triggered a flight to precious metals, pushing silver above $120 per ounce,\u201d Hareesh said. At the same time, a persistent global supply gap has intensified, with 2025 marking the fifth straight year of deficits. Industrial demand from solar energy, electric vehicles and AI-related electronics has further tightened supplies.<\/p>

Monetary factors have also played a role. Expectations of US Federal Reserve rate cuts and a weakening dollar amplified investment flows into silver. However, Hareesh cautioned that silver\u2019s historical volatility means steep corrections can occur at any time. \u201cTechnical indicators show the market is overbought. A stabilisation in geopolitics, a stronger dollar, reduced risk aversion or improved mine output could ease upward pressure on prices,\u201d he said.<\/p>

ETF flows<\/strong><\/p>

MOFSL also highlighted a shift in investor behaviour. Despite elevated prices, global silver ETFs have recorded outflows of more than 3 million ounces since the start of 2026. In contrast, gold ETFs continue to see steady inflows.<\/p>

This divergence suggests a rotation rather than an exit from precious metals. Large investors appear to be locking in silver gains and reallocating toward gold, which offers lower volatility and stronger defensive characteristics in uncertain macro conditions.<\/p>

Liquidity and geopolitics add to swings<\/strong><\/p>

The broader macro backdrop is further amplifying volatility. Global liquidity continues to expand, with US M2 near $22 trillion and China\u2019s M2 exceeding \u00a5340 trillion. Excess liquidity, MOFSL noted, tends to increase asset price volatility rather than stability. Combined with geopolitical tensions in the Middle East, frictions involving Iran and Venezuela, and uncertainty around US fiscal and trade policy, the environment remains prone to sharp price swings.<\/p>

Rebalancing, not abandoning silver<\/strong><\/p>

Importantly, MOFSL stressed that its stance is not bearish on silver. Structural drivers\u2014industrial demand, energy transition use cases and supply constraints\u2014remain intact. However, after a move from around \u20b960,000 to above \u20b93.2 lakh, portfolio rebalancing is increasingly likely.<\/p>

The brokerage recommends trimming silver exposure, tilting allocations more toward gold in the near term and maintaining silver as a long-term core holding. One illustrative approach suggests a 75% gold and 25% silver allocation as a more stable way to remain invested in precious metals while managing volatility.<\/p>

The message from analysts is clear: silver has already delivered extraordinary gains. At this stage of the cycle, gold offers better risk-adjusted returns as markets transition from momentum-driven rallies to a phase defined by sharp corrections and heightened uncertainty.<\/p> <\/div>

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Gold and silver prices suffered one of their sharpest corrections in years on Friday, snapping a powerful rally that had pushed both metals to record highs and forcing investors to reassess near-term risk. Silver plunged nearly 17% to below \u20b93.5 lakh per kg on the MCX, while gold fell more than 7%, wiping out around […]<\/p>\n","protected":false},"author":1,"featured_media":2516,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[7341,7337,7335,7342,319,2011,7330,7327,7338,7332,3063,2052,7333,7334,7339,7331,2112,2012,3062,7336,7329,7328,7340],"class_list":["post-2515","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-content-marketing","tag-bullion","tag-bullion-market-outlook","tag-comex-gold-below-5000","tag-cracks","tag-drops","tag-gold","tag-gold-down-7-percent","tag-gold-price-drop-today","tag-gold-silver-correction-after-rally","tag-gold-silver-volatility","tag-highs","tag-lakh","tag-mcx-gold-price-fall","tag-mcx-silver-price-drop","tag-precious-metals-price-data","tag-precious-metals-sell-off","tag-rally","tag-record","tag-silver","tag-silver-below-100-dollars","tag-silver-falls-17-percent","tag-silver-price-crash","tag-sinks"],"acf":[],"_links":{"self":[{"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=\/wp\/v2\/posts\/2515","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2515"}],"version-history":[{"count":0,"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=\/wp\/v2\/posts\/2515\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=\/wp\/v2\/media\/2516"}],"wp:attachment":[{"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2515"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2515"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2515"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}