Gold, Silver Swings Shake Investors
Analysts say volatility reflects market recalibration, not a structural breakdown
- Sharp intraday swings unsettle precious metals investors
- Gold and silver retreat after record-breaking rally
- Analysts say correction reflects market recalibration
- Central bank buying and physical demand remain strong
GG News Bureau
Mumbai, 7th Feb: Recent price movements in gold and silver have unsettled investors, with intraday swings reaching levels rarely seen in precious metals. What was once viewed as a relatively stable safe-haven asset is now experiencing sharp fluctuations, challenging long-held market assumptions.
Despite the turbulence, analysts say the market is undergoing a recalibration rather than a structural breakdown. The volatility comes after an exceptional rally in which gold recorded more than a dozen all-time highs within weeks, while silver surged to stretched levels that left the market crowded.
From that perspective, the current correction and consolidation appear both predictable and necessary. Although prices have retreated from last week’s peaks, gold is stabilising within a trading range of about $4,500 to $5,000 an ounce and has still managed a modest weekly gain.
Market experts note that the selloff reflects the unwinding of speculative positions after a steep advance, rather than a shift in long-term fundamentals. Prices have rebounded from their lows, indicating that underlying demand remains intact.
A major driver of that demand is not short-term trading activity but sustained purchases by central banks. Many monetary authorities continue to accumulate gold at elevated levels, while physical demand in key markets such as India and China has remained resilient despite the volatility.
At the same time, overall portfolio allocation to gold remains relatively low, suggesting scope for increased institutional participation if global economic uncertainty persists.
This underlying demand helps explain why bullish forecasts remain in place. Several major banks continue to project gold prices approaching $6,000 an ounce by the end of the year. These projections are based less on short-term price swings and more on structural factors such as rising sovereign debt, fiscal imbalances, geopolitical tensions, and gradual de-dollarisation.
In this context, analysts argue that the current volatility is part of a broader adjustment process. Gold is repricing global risk in real time, and such transitions are rarely smooth. While the instability may unsettle investors in the short term, many see the correction as laying the groundwork for a more durable and broad-based rally.
