As gold retreats from its record highs due to easing trade tensions and profit booking, analysts suggest silver may now offer better upside potential amid favourable macro trends.
May 3, 2025: New Delhi: After breaching the ₹1 lakh mark, gold prices have sharply corrected, dropping ₹7,000 per 10 grams on the MCX to hover around ₹93,000. The retreat comes on the back of easing global trade tensions and significant profit booking, reducing demand for the yellow metal as a safe-haven asset.
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This week alone, MCX gold prices declined by 2.04%, settling at ₹93,300, while spot gold on the COMEX slipped 1.8% to $3,255.60 an ounce.
Why Is Gold Falling?
The recent correction is attributed to improving global trade sentiment. US President Donald Trump’s comments hinting at progress in trade agreements with countries including India, Japan, and China have improved risk appetite among investors. According to Angel One’s Tejas Shigrekar, this optimism has led to a rotation away from gold.
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Meanwhile, the US Federal Reserve has kept interest rates steady, awaiting clearer signs of economic weakness or inflation moderation. As interest rates remain elevated, non-yielding assets like gold lose some of their appeal.
More Downside Ahead?
Kunal Shah of Nirmal Bang called the recent gold rally—from ₹90,000 to nearly ₹1 lakh in three days—a “bubble-like” spike driven more by fear than fundamentals. Central bank buying was absent during this surge, and jewellery demand in China and India remained weak.
Shah believes gold may continue to fall, projecting COMEX prices could slip to $2,950–$3,000 and MCX gold to ₹88,000–₹89,000 in the next 3–4 months. Shigrekar echoed the sentiment, advising aggressive traders to look for entry opportunities in the ₹91,600–₹91,200 demand zone.
Silver Shines Brighter?
As gold shows signs of fatigue, many analysts are turning bullish on silver. Despite near-term weakness due to tariffs on solar panels—key to silver demand—Shah believes this is temporary. A breakthrough in US-China trade talks could revive momentum.
Another bullish factor is the gold-silver ratio, which remains historically elevated. Rishabh Nahar of Qode Advisors noted that silver tends to outperform when the ratio exceeds 80, signaling that silver is undervalued.
Shah suggests silver is attractive at ₹90,000–₹92,000 levels on the MCX and $30.50–$31 on COMEX. He expects silver to rise to ₹1,05,000–₹1,10,000 per kg in India and $35–$38 per ounce globally over the next six months.
This week, silver dipped 3.5% on the MCX to ₹94,000/kg and fell 1.9% to $32.4 on COMEX—but analysts see this as a buying opportunity rather than a trend reversal.
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