Gold, Silver and Copper Retreat After Record Rally as Profit Booking and Global Cues Trigger Correction
After an extraordinary rally that pushed precious and base metals to lifetime highs, gold, silver and copper prices witnessed a sharp correction on December 29, falling between 2 percent and 13 percent across contracts. The decline comes amid a combination of profit booking, easing geopolitical tensions, regulatory developments in China and tighter trading conditions in global derivatives markets.
The pullback marks one of the sharpest single-day corrections in commodities this year, prompting investors to reassess near-term risks after a multi-month surge driven by rate-cut expectations, geopolitical uncertainty and tight global supply conditions.
Sharp Declines Seen Across Gold, Silver and Copper Contracts
On the domestic futures market, gold prices slipped nearly 2 percent from record levels. Gold futures with February expiry fell to ₹1,37,646 per 10 grams after hovering close to lifetime highs. April and June contracts also declined by around 2 percent after hitting fresh peaks earlier in the session.
Silver saw a far steeper correction. March silver futures plunged nearly 8 percent to ₹2,32,663 per kilogram after touching a lifetime high. Contracts with May and July expiries erased all gains as well, dropping between 9 percent and 10 percent from intraday highs.
Copper prices recorded the sharpest fall. After hitting a record ₹1,392.95 per kilogram, January copper futures tumbled nearly 13 percent to ₹1,211.05 per kilogram. February and March contracts also slipped into the red after scaling new all-time highs.
Market participants said the breadth and speed of the decline suggest a combination of technical and macro-driven factors at play.
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Profit Booking Sets In After a Stellar 2025 Rally
One of the primary triggers behind the sell-off was profit booking after a staggering rally through 2025. Metals had surged on expectations of global rate cuts, central bank buying, supply tightness and heightened geopolitical risks.
“On the technical front, after a staggering rally of 2025, we don’t expect similar returns in 2026,” said Pranav Mer, Vice President, Commodity & Currency Research at JM Financial Services.
The strong uptrend encouraged leveraged positions and speculative bets, making prices vulnerable to sharp corrections once momentum slowed. Traders said the absence of fresh bullish triggers at elevated levels prompted investors to lock in gains.
Key takeaway for investors:
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Elevated prices increase vulnerability to sharp pullbacks
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Profit booking is a healthy but often volatile phase after strong rallies
Easing Geopolitical Tensions Weigh on Safe-Haven Demand
Another major factor denting sentiment was the easing of geopolitical tensions, particularly around the Russia-Ukraine conflict. Reports of progress toward a potential peace framework reduced the immediate appeal of safe-haven assets such as gold and silver.
US President Donald Trump and Ukrainian President Volodymyr Zelenskyy met recently in Florida, with both sides signalling progress toward a peace plan.
“We had great discussions on all the topics… There has been 90 percent agreement on the 20-point peace plan,” Zelenskyy said, adding that security guarantees and sequencing of actions were nearing consensus.
The prospect of reduced geopolitical risk dampened demand for precious metals, which had benefited significantly from global uncertainty over the past year.
China’s Export Policy Signals Add to Market Uncertainty
China’s policy stance also played a complex role in the correction. Reports indicate that China plans to restrict exports of certain physical metals starting 2026, requiring exporters to apply for licenses until 2027.
While such restrictions could tighten long-term supply, they also introduced near-term uncertainty, prompting traders to reduce exposure after the recent surge.
World’s richest person Elon Musk reacted to the reports on X, saying, “This is not good. Silver is needed in many industrial processes.”
Motilal Oswal Financial Services noted, “Proposed export licensing requirements starting January 1, 2026 signal tighter control over outbound flows, restricting the availability of physical metal in global markets.”
In the short term, however, uncertainty around implementation and timing appears to have encouraged risk-off positioning.
CME Margin Hike Triggers Forced Liquidation in Silver
The sharp fall in silver prices was also exacerbated by a regulatory move from CME Group, which operates major global derivatives exchanges. On December 26, CME announced a hike in initial margins for March 2026 silver contracts to $25,000 from $20,000 earlier.
Traders who failed to maintain higher margins were forced to liquidate positions, adding to selling pressure.
Such margin hikes typically curb speculative excess but can trigger abrupt price corrections when leveraged positions are unwound simultaneously.
Metal Stocks React as Prices Cool Off
The decline in commodity prices had a visible impact on metal stocks as well. Shares of Hindustan Zinc and Hindustan Copper retreated sharply from their intraday highs, reflecting their close linkage to silver and copper prices, respectively.
Market participants said equity investors may now turn more selective, focusing on balance-sheet strength and cost efficiency rather than chasing momentum-driven gains.
What Lies Ahead for Commodity Prices?
Analysts believe the medium- to long-term structural drivers for metals—such as energy transition demand, electrification, renewable energy and supply constraints—remain intact. However, near-term volatility is likely to persist.
“Metals remain vulnerable to shifts in global growth expectations, currency movements and central bank signals,” analysts said, cautioning that corrections could be sharp after such extended rallies.
For investors, the current phase underscores the importance of disciplined positioning and risk management, especially after record-breaking runs. While the long-term story for metals may remain compelling, the recent correction is a reminder that commodity markets can turn swiftly when sentiment changes.
