Gold prices witnessed a historic collapse in the latest trading session, recording their sharpest intraday percentage fall in over four decades, triggering intense volatility across domestic and global markets.
Gold prices plunged 11%, marking their biggest intraday percentage decline since 1983, as a sharp rebound in the US dollar and a shift in interest-rate expectations led to aggressive profit booking after a near-vertical rally over recent months.
What happened to gold prices?
On the domestic futures market, gold February 5 contracts settled sharply lower at Rs 1,49,075 per 10 grams, declining by Rs 20,328 or around 12% in a single session. The fall erased a significant portion of January’s gains, during which gold had surged to record highs.
In the international market, COMEX gold prices slumped by $591 to close at $4,763 per ounce, after briefly trading near $5,600 per ounce earlier in the week. The sharp reversal followed a powerful rebound in the US dollar, which posted its strongest single-day rise in months, weighing heavily on non-interest-bearing assets like gold.
Market participants said the sell-off reflected a rapid reassessment of monetary policy expectations, with traders pricing in a more hawkish stance from the Federal Reserve following recent developments around its leadership.
Should investors buy, hold or sell gold? Experts weigh in
Anil Singhvi, Managing Editor at Zee Business, said the correction was expected and healthy after an extended rally. He advised investors to remain patient and wait for deeper corrections before considering fresh buying. According to Singhvi, gold could offer favourable buying opportunities closer to Rs 1.25 lakh per 10 grams. Market expert Sumeet Bagadia believes the correction may not be over yet. He said gold may need to correct by at least Rs 1 lakh from recent peaks before it becomes attractive again from a risk-reward perspective.
Another market analyst said gold could find interim support near Rs 1.40 lakh per 10 grams, adding that the recent fall appears “natural” after prices moved into extreme overbought territory.
Gold’s sharp fall marks a decisive break from its recent rally and highlights how quickly sentiment can shift in crowded trades. While long-term fundamentals may remain intact, experts broadly agree that near-term volatility could persist, and investors should approach gold cautiously until clearer price stability emerges.