After a two-day sell-off, investors returned to precious metals on Tuesday, leading gold and silver prices to soar. Gold is expected to have its largest single-day increase since 2008. The recovery follows one of the worst declines in gold and silver prices in decades last week, which was caused by aggressive liquidation, increased margin requirements, and uncertainty around US monetary policy.
The two metals were forced into highly oversold area by the steep decline, which paved the way for a powerful technical recovery. After falling far below $5,000 per ounce last week, spot gold recovered from Monday’s lows in global markets. Silver also had a significant increase, recovering from Friday’s worst one-day decline ever, which was followed by further losses on Monday.
Last week’s sell-off was especially harsh. Silver fell 27% in a single day, while gold fell over 10% in a single session—its worst decline since 1983. Gold plunged more than 13% and silver over 34% during the two trading sessions, erasing much of their recent gains and causing margin calls on trading desks.
The rise in prices on Tuesday is a result of short covering following the steep fall and fresh buying activity at lower levels.
A report by Jateen Trivedi, VP-Research Analyst (Commodity and Currency) at LKP Securities, gold saw a substantial increase in price worldwide, which triggered an upward trend in domestic markets as well. He said that fresh safe-haven buying and short covering at lower levels were the main reasons why MCX gold surged beyond Rs 1,51,000 and gained around Rs 8,000 intraday.
Later this week, US non-farm payrolls and unemployment data will be actively tracked, said to Trivedi, as they continue to be crucial inputs for the US Federal Reserve’s rate stance and may increase bullion price volatility. Technically speaking, he believes that gold has immediate support around Rs 1,45,000 and resistance around Rs 1,55,000.
After last week’s record decline, silver also experienced a strong recovery as traders carefully rebuilt their holdings in response to forced selling and margin increases brought on by the sudden decline.
Based on Hareesh V, head of commodities analysis at Geojit Investments, following last week’s unprecedented sell-off, gold and silver are beginning to stabilize. He claims that investors are reevaluating whether the steep decline was caused by structural factors or just an overshoot brought on by transient triggers. According to him, the basic factors sustaining bullion are still in place, suggesting that the correction was mostly technical in nature rather than a change in the long-term fundamentals.
As markets continue to process the effects of margin rises, a higher US dollar, and repositioning related to developments around the US Federal Reserve leadership, Hareesh warned that trading may remain erratic in the immediate future. He added by saying that while a long-term recovery would happen gradually, more liquidation concerns would only surface if prices broke last week’s lows, which are now crucial support levels.
As per Choice Broking’s commodity and currency expert Aamir Makda, gold has recovered dramatically from recent lows and is now trading much higher. He pointed out that prices had recovered from important retracement levels, with Rs 1,54,000 serving as immediate resistance. In the daysto come, prices may go towards higher resistance zones if there is a breakout over this level, which would increase bullish momentum.
Silver prices have risen back above important technical levels, according to Makda, and a sustained breakout might result in more increases in the future. He anticipates that, if important support levels hold, both gold and silver will see a somewhat positive move during the coming week.
Analysts are generally optimistic about the medium- to long-term outlook for precious metals, despite last week’s sharp correction. Many note that despite the sharp decline, prices have mostly returned to their pre-correction levels, highlighting how stretched the rise had gotten.
Gold & Silver: Crash vs Recovery Snapshot
| Parameter | Gold | Silver |
|---|---|---|
| Biggest Single-Day Fall (Last Week) | Over 10% (worst since 1983) | 27% (worst one-day fall ever) |
| Total Decline in Two Sessions | More than 13% | Over 34% |
| Key Reason for Sell-Off | Aggressive liquidation, margin hikes, Fed uncertainty | Forced selling, margin calls, technical breakdown |
| Oversold Condition | Deeply oversold | Extremely oversold |
| Recovery Trigger | Short covering + safe-haven buying | Short covering + cautious re-entry |
| Biggest Daily Gain (This Week) | Largest since 2008 | Strong rebound after historic crash |
| MCX Price Recovery | Above 1,51,000, +8,000 intraday | Reclaimed key technical levels |
| Immediate Support Level | Around 1,45,000 | Near recent breakout zone |
| Immediate Resistance Level | Around 1,55,000 | Higher resistance on sustained breakout |
| Analyst Outlook | Medium-to-long term bullish | Gradual recovery with volatility |
