From Record Highs to Reality: Decoding the Sudden Slump in Silver, Gold and Bitcoin

The commodities market has been hit by a "perfect storm" of a strengthening US dollar and shifting expectations for US interest rates. Silver has stolen the headlines with a dramatic 10 per cent plunge on the MCX, dropping over Rs 26,850 per kg to hit levels around Rs 2,42,000. Internationally, COMEX silver fell as much as 16 per cent in early trading, touching a low of USD 73.38 per ounce. A sharp decline in industrial interest at peak price levels, combined with a wave of profit-taking by speculative investors, triggered the sell-off.

While gold initially tracked the downward trend, dropping to an Intraday low of Rs 1,48,455, it staged a significant comeback later in the session. Buyers stepped in to reclaim the Rs 1,53,000 mark, demonstrating that the yellow metal remains the preferred refuge during times of broader market unrest. Domestically, gold recovered nearly 4 per cent from its lows, as investors utilised the dip as a technical correction to re-establish long-term positions amid persistent economic uncertainties.

Market sentiment has been heavily influenced by the nomination of Kevin Warsh as the next Fed Chair. Seen as a policy hawk, his potential leadership has traders pricing in a slower pace of rate cuts and a smaller Fed balance sheet, which has given the US dollar a "new lease of life." The US Dollar Index (DXY) climbed to 97.74, acting as a major headwind for all dollar-denominated assets and dampening the immediate appeal of precious metals for international buyers.

For the first time since the November 2024 US Election, Bitcoin has dipped below the critical USD 70,000 threshold. After reaching staggering highs of USD 126,000 in October 2025, the world's largest cryptocurrency is now trading nearly 40 per cent off its record peak. The recent slump to USD 69,821 was triggered by a broader risk-off sentiment in US tech stocks, which spilt over into the crypto sector as investors pulled back from highly volatile assets.

The move across both bullion and crypto was exacerbated by a wave of forced liquidations and increased trading barriers. On the MCX, margin hikes (4.5 per cent for silver and 1 per cent for gold) forced many retail traders to either add collateral or exit their positions, fuelling the downward spiral. In the crypto market, data shows that over USD 2 billion in long and short positions were wiped out this week alone. Investors are now closely watching the upcoming US non-farm payrolls data to determine if this is a healthy consolidation or the start of a deeper structural reversal.

Disclaimer: The article is for informational purposes only and not investment advice.