Gold and Silver Rebound After a Historic Crash as Investors Reassess the Risk–Reward Equation
Gold and silver prices have once again captured the full attention of traders and long-term investors after last week’s historic crash rattled global commodity markets and triggered one of the steepest sell-offs seen in decades. Silver recorded its worst single-day fall since 1980, while gold posted its sharpest multi-session correction in recent memory, shaking the confidence of even seasoned market participants. As the MCX opened for a special Sunday session alongside the Union Budget 2026 presentation, market participants entered trading with a mix of caution, curiosity and opportunistic buying interest.
The magnitude of the fall was staggering, with estimates suggesting that nearly $5 trillion in global wealth tied to precious metals was erased during the correction. Yet, what followed was equally dramatic — a partial rebound that has sparked a new debate across trading desks: is this a healthy recovery after excesses, or merely a temporary bounce in a highly volatile environment? Investors are now recalibrating strategies as price swings grow sharper and more frequent.
Recovery in Gold and Silver Signals Bargain Buying but Confidence Is Still Fragile
Gold futures for April expiry managed to reclaim the ₹1.51 lakh per 10 grams level, after slipping as low as ₹1,38,634 earlier in the day. This translates into an intraday recovery of nearly 9 percent from the day’s low, a move that clearly indicates the emergence of bargain hunters and short-covering activity. However, despite the rebound, prices are still marginally in the red, showing that the market has not fully regained confidence and remains sensitive to global cues.
Silver futures also mirrored this recovery trend, climbing back above the ₹2.8 lakh per kg mark after hitting early lows near ₹2,65,652. The 7 percent intraday bounce suggests that traders were quick to accumulate positions after the steep fall. Still, the metal continues to trade over 2 percent lower overall, underlining that sentiment remains cautious rather than outright bullish. The divergence between price recovery and sentiment shows investors are participating, but selectively and with tighter risk controls.
Gold ETFs echoed this recovery, rebounding as much as 15 percent from their morning lows, offering some relief to investors who saw sharp mark-to-market losses in the previous sessions. Silver ETFs, on the other hand, did not fully mirror the price rebound, signaling that investor conviction in silver remains weaker for now.
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Hawkish Fed Signals and Dollar Strength Sparked the Meltdown in Bullion
The root of the sharp sell-off can be traced to a major macro trigger — the nomination of Kevin Warsh as the next US Federal Reserve chair by President Donald Trump. Warsh is widely perceived as a hawkish policymaker who prioritizes inflation control and tighter financial conditions over aggressive rate cuts. This nomination forced markets to quickly reprice expectations around US interest rates, bond yields and liquidity conditions.
As expectations of prolonged higher rates strengthened, the US dollar surged, making dollar-denominated assets like gold and silver less attractive. A stronger dollar typically pressures bullion because it raises the opportunity cost of holding non-yielding assets. At the same time, metals had rallied sharply in prior months, leading to overcrowded bullish positions. When sentiment flipped, profit-booking intensified and accelerated the fall.
Nikunj Saraf, CEO of Choice Wealth, summarized the mood clearly:
“A hawkish Fed chair pick sparked global fears of tighter policy, strengthening the dollar and crushing overbought metals. This is classic profit-taking after record highs.”
Metal Stocks and Commodity-Linked Shares Face Heavy Portfolio Impact
The correction in bullion prices did not stay limited to commodities; it spilled over into equities linked to the metals ecosystem, creating ripple effects across investor portfolios. Shares of mining and metal companies saw deep cuts as sentiment weakened across the sector.
Key declines included:
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Hindustan Copper down 19%
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NALCO slipping 14.5%
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Hindustan Zinc falling 13.5%
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Vedanta and Hindalco down around 10%
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MCX shares declining over 6%
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Gold financiers like Muthoot Finance and Manappuram falling up to 10%
Such broad-based declines reflect how interconnected commodity prices and equity valuations have become, especially when large speculative positions unwind.
Margin Hikes and MCX Rule Changes Add to Trading Volatility
Adding another layer of pressure, MCX revised its margin requirements after COMEX increased margins internationally. Gold margins were set at 20 percent, while silver margins were raised to 25 percent. Higher margins raise capital requirements for traders, often reducing speculative activity but also amplifying price swings when positions are adjusted quickly. For short-term traders, this increases both risk and cost, contributing to sharper moves.
Here’s What Happened Today and Why Traders Reacted
Today’s trading session was shaped by multiple forces acting simultaneously:
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Bargain buying after extreme correction
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Budget-day uncertainty influencing positioning
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Slight cooling in dollar momentum
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Margin revisions changing trade dynamics
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ETF recovery encouraging selective entry
Traders reacted strongly because the recent fall was unusually deep and fast, creating opportunities for both short-covering and tactical buying. At the same time, uncertainty around Budget announcements and global data kept risk appetite measured rather than aggressive.
What This Means for Investor Portfolios Going Forward
For investors, the recent episode is a reminder that even traditional safe-haven assets can experience sharp volatility when macro conditions shift. Portfolios exposed to gold ETFs, silver funds or metal stocks likely saw short-term valuation swings, testing investor discipline.
However, structural drivers like central bank buying, geopolitical uncertainty and supply constraints still provide long-term support to bullion. Experts argue that corrections of this nature are not unusual after extended rallies and often reset markets for the next phase.
Investors should now watch:
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US labor and inflation data
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Dollar index trends
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Fed commentary under new leadership
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Budget-related import duty signals
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ETF flow trends
The next few sessions will determine whether this rebound turns into stability or remains a temporary pause in a volatile cycle.
