Gold and Silver Prices Plunge as Strong Dollar, Trade Optimism, and Fed Expectations Shake Bullion Markets

Gold and silver prices are under pressure, ending a robust two-month rally as global market dynamics shift. Investors are exiting precious metals due to a strengthening US dollar, cooling geopolitical risks, and changing expectations for US Federal Reserve interest rate policy.

Why Gold and Silver Are Dropping

Recent declines in gold and silver follow improvements in global trade discussions, particularly between the US and China, as well as positive signals from conflict zones such as Gaza. A stronger dollar has further reduced the appeal of precious metals, which generally act as safe havens during uncertainty. As markets sense less immediate risk, many investors are locking in profits from earlier gains.

The Role of the Federal Reserve

Market attention is focused on the US Federal Reserve, which is expected to announce a 25-basis-point rate cut this week after soft inflation data. Rate cuts typically support gold, but the outlook depends on the Fed’s tone and future guidance. If the Fed hints at fewer cuts, bullion prices may fall further. However, dovish signals could quickly restore investor appetite for gold and silver.

Technical Levels to Watch

Experts highlight key technical support and resistance levels for gold and silver. Gold is expected to find support around Rs 1,22,470–1,21,780, with resistance at Rs 1,23,950–1,24,800. Silver’s support lies near Rs 1,46,250–1,45,150 and resistance at Rs 1,47,950–1,48,780.

What Could Spark a Turnaround?

Further volatility is anticipated, with upcoming catalysts including a key meeting between the US President and China’s President, major central bank decisions, and earnings reports from leading tech companies. Any flare-up in geopolitical tensions or unexpected central bank actions could rapidly revive demand for safe-haven assets like gold and silver.

Gold and silver prices are dropping. What’s driving the decline in precious metals?

Abhishek Bhilwaria, CEO, Bhilwaria MF states,

The recent decline in gold and silver prices stems from a combination of profit-taking, currency strength, and shifting market sentiment. After an extended rally that pushed both metals to record highs, investors are locking in profits, prompting a short-term correction. A stronger U.S. dollar has also weighed on precious metals, as it makes dollar-denominated commodities more expensive for foreign buyers, reducing global demand. At the same time, easing geopolitical tensions driven by progress toward a ceasefire in conflict zones and optimism around U.S.-China trade talks has dampened safe-haven demand. Investors are also awaiting guidance from upcoming central bank meetings, particularly the U.S. Federal Reserve, where uncertainty over the pace of rate cuts is influencing sentiment. Reduced investment in gold-backed exchange-traded funds has further amplified the pullback. Despite near-term weakness, the longer-term outlook for precious metals remains constructive, supported by ongoing central bank purchases and broader economic uncertainty.