After delivering months of record-breaking returns, gold and silver suddenly lost their shine in late January. The sharp crash shocked many investors, and prices have still not returned to their earlier highs.
However, the mood is slowly changing. While neither metal is near its record peak, both gold and silver are showing steady gains once again.
At 1.30 pm, on February 20, MCX gold was trading at Rs 1,55,809, up by Rs 990 or 0.67%. MCX silver stood at Rs 2,45,277, higher by Rs 3,884 or 1.61%.
So, what is driving the recovery, and what should investors do next?
SAFE-HAVEN DEMAND RETURNS
The recent rise in bullion prices is largely linked to growing global tensions, especially between the US and Iran. Whenever geopolitical risks rise, investors often move their money into assets that are seen as safer, and gold and silver usually top that list.
Hareesh V, Head of Commodity Research at Geojit Investments Limited, said, “Rising US–Iran tensions have already driven investors toward bullion, pushing gold close to the $5,000 mark as safe-haven demand strengthens. Investors typically turn to gold and silver during geopolitical conflicts because these metals preserve value, reduce exposure to market volatility, and serve as trusted hedges when currencies and financial markets face uncertainty.”
He pointed out that while a stronger US dollar and changing interest rate expectations may slow down any sharp rally, the overall mood still favours bullion.
“Although a stronger dollar and shifting interest-rate expectations may temporarily cap sharp gains, persistent or escalating tensions are likely to keep risk-averse flows elevated, potentially supporting a further rise in gold and silver prices in the coming days,” he added.
In simple terms, as long as uncertainty remains, investors may continue to park money in precious metals.
GOLD SHOWS SIGNS OF STABILITY
Gold had witnessed one of its steepest declines in recent times before this rebound. The latest gains suggest that buyers have stepped in at lower levels, seeing value after the correction.
Aksha Kamboj, Vice President of the India Bullion & Jewellers Association (IBJA) and Executive Chairperson at Aspect Global Ventures, said, “Gold is rebounding strongly after observing one of the steepest declines in recent times. The recovery indicates bargain buying at lower levels, as investors start to return to the metal after the sharp correction.”
She added that despite ongoing volatility, the broader positive sentiment around gold has not disappeared. “Although volatility is still high, the recovery indicates that the overall positive sentiment is not lost. In the short term, gold may try to stabilise as markets re-evaluate global trends and rate expectations.”
SILVER REBOUNDS, BUT REMAINS VOLATILE
Silver, which tends to move more sharply than gold, also suffered a heavy sell-off. It is now witnessing gradual recovery, supported by renewed investor interest.
Kamboj said, “Silver is making a strong recovery after the sharp sell-off in the previous session. The recovery indicates renewed investor interest and short covering, although sharp movements are likely to continue as silver is more sensitive to market sentiment. If global trends are favorable, silver may continue to recover in the coming sessions.”
WHAT SHOULD INVESTORS DO?
The big question now is whether to buy, hold or sell.
For long-term investors, gold continues to serve as a hedge against uncertainty. Holding a balanced exposure to bullion can help reduce overall portfolio risk, especially during global tensions. For those who already hold gold or silver, it may be wise to stay invested rather than panic over short-term swings.
Fresh buyers should avoid investing large amounts at once. Instead, gradual buying on dips can help manage risk.
Short-term traders, however, should be careful. Volatility remains high, particularly in silver. Quick gains are possible, but so are sharp falls.
