The Economic Times·2026-02-05 05:23Core Viewpoint - Precious metals, particularly silver and gold, experienced significant declines, with silver plunging nearly 17% and gold dropping over 3%, largely due to a strengthening dollar and easing geopolitical tensions [1][2][3]. Market Impact - Indian markets were heavily affected, with MCX silver March futures falling over 8% and MCX gold trading 1% lower. Equity markets also suffered, with Axis Silver ETF collapsing by up to 21% and Nippon India Silver ETF dropping 13% [2][14]. Reasons for Price Decline - Strengthening Dollar: The dollar reached a near two-week high, making dollar-priced gold more expensive for foreign currency holders, thus reducing demand for precious metals [3][14]. - Geopolitical Easing: Reduced tensions, particularly between the US and Iran, diminished gold's appeal as a safe-haven asset [6][14]. - US-China Relations: A positive phone call between US President Trump and Chinese President Xi Jinping alleviated concerns about escalating economic tensions, further dampening demand for safe-haven assets [8][14]. Analyst Perspectives - Some analysts view the selloff as a healthy consolidation rather than a trend reversal, suggesting that the broader uptrend for gold remains intact despite recent volatility [10][15]. - Others express caution, indicating that the decline in silver and other metals may continue, with MCX Silver March prices expected to drop to ₹235,000/kg amid weak international trends [11][15]. Tactical Guidance - Recommendations include buying gold above ₹154,000 with a target of ₹156,800-₹158,500 and silver above ₹270,000 with a target of ₹278,000-₹284,000, indicating potential recovery points [12][15]. - Analysts from Standard Chartered expect continued volatility in gold prices until there is more certainty regarding monetary policy, while structural drivers for precious metals remain intact [13][15].