Gold and silver prices fall by up to 6%, ETFs crash over 14%; here’s why

Gold and silver price crash: Silver futures fell by nearly 6% to an intraday low of ₹3,75,900 per kg in the early morning session on Friday, January 30, after touching an all-time high of ₹4,20,048 per kg on Thursday.

The white metal contracts for March delivery climbed nearly 9% in the previous session to surpass the ₹4.2 lakh per kg mark on the Multi Commodity Exchange (MCX).

Meanwhile, gold futures also fell on Friday, falling by 4.8% to an intraday low of ₹1,75,100 per 10 gram on the MCX. Gold contracts for April expiry touched a lifetime high of ₹1,93,096 per 10 gram on Thursday.

Even gold and silver ETFs crashed up to 14% in the morning trade on January 30 after a record rally seen in the previous session.

Precious metals declined on Friday amid speculations that the US Federal Reserve may get a more hawkish chair and profit-booking after the rally seen on Thursday.

Record rally

On Thursday, gold and silver breached records in both domestic and international markets. Silver price in Delhi surged by ₹19,500 to a new record high of ₹4,04,500 per kg, while gold soared by ₹12,500 to a fresh peak of ₹1,83,000 per 10 gram.

In the international market, gold added $177.14, or 3.3%, to hit a record high of $5,595.02 per ounce. Silver prices in the overseas markets rose sharply, gaining $3.59, or 3.07%, to reach a record of $120.45 per ounce.

The precious metals rose on Thursday due to tensions in Iran, falling currencies and strong safe-haven demand. Gold and silver are safe-haven metals; investors turn to them during uncertain situations.

Why did gold and silver fall today?

Following a stellar rally in the previous session, gold and silver prices fell after US President Donald Trump announced his plans to select the new US Federal Reserve chair on Friday.

Due to speculations that the US Federal Reserve may get a more hawkish chair who can introduce more rate cuts, giving support to the US dollar, precious metals declined. Further, the sharp fall was also seen because of heavy speculative trading and profit-booking by many.

However, even after the fall, gold and silver prices remain elevated. Gold is currently over 30% up since the start of January, while silver has grown by over 61% during the month.