Gold and silver exchange-traded funds (ETFs) declined sharply in trade on January 30, mirroring a steep fall in precious metal prices after a historic rally.

Gold futures on the Multi Commodity Exchange (MCX) with April expiry dropped nearly 5 percent to around ₹1,75,100 per 10 grams, just a day after hitting a lifetime high of ₹1,93,096 per 10 grams. Contracts expiring in February and June also fell sharply, declining nearly 6 percent each during early trade.

Silver prices followed a similar trend, dragging down silver ETFs as investors booked profits after the recent surge.

Why Are Gold and Silver Prices Falling Today?

🏦 1. Fed Chair Nomination Confirmed

President Donald Trump officially nominated Kevin Warsh as the next Chair of the Federal Reserve to succeed Jerome Powell. Warsh is seen as more hawkish — potentially prioritising inflation control and higher interest rates. This strengthened the U.S. dollar and pressured precious metals prices.

💵 2. Stronger U.S. Dollar

With expectations of tighter monetary policy under Warsh, the U.S. dollar gained strength. A stronger dollar typically makes dollar-denominated assets like gold and silver more expensive for foreign buyers, reducing demand and pushing prices down.

📉 3. Profit Booking After Historic Rally

Gold and silver had soared to record highs recently — gold near $5,594 per oz and silver above $121 per oz — prompting traders to take profits as momentum faded.

🔁 4. Overbought Technical Conditions

Momentum indicators showed that both metals had entered “overbought” territory, increasing the likelihood of a short-term technical correction as speculators unwind positions.

📊 5. Reduced Safe-Haven Demand

Reports noted tentative deals in the U.S. to avert a government shutdown, slightly easing extreme geopolitical fear — one of the key drivers behind the rally — and reducing immediate demand for haven assets like gold.

What Should Investors Do Now?

Market experts remain divided on whether the current fall presents a buying opportunity or signals overheating.

Tanvi Kanchan, Associate Director at Anand Rathi Share and Stock Brokers, said investors are split between those seeing the correction as a chance to buy and those worried about stretched valuations. However, she highlighted that long-term fundamentals remain strong, supported by near-record industrial demand from solar panels, electric vehicles, and AI infrastructure.

She cautioned that after the explosive gains seen in 2025, timing a single entry point is risky. Instead, she advised investors to spread their investments over several weeks or months rather than deploying capital in one go. This strategy helps capture dips while protecting against further corrections.

For conservative investors, experts recommend allocating 5–10 percent of the portfolio to gold and silver ETFs through systematic investments. This reduces timing risk while maintaining exposure to assets that benefit from geopolitical tensions and uncertainty around global monetary policy.

Khoo from VT Market said that structural drivers such as central bank gold accumulation, long-term demand, and inflation hedging remain intact. However, he advised investors to avoid aggressive short-term speculation due to ongoing volatility.

Echoing similar views, Nirpendra Yadav, Senior Commodity Research Analyst at Bonanza, said gold continues to play a crucial role in portfolio diversification. Global uncertainties, steady central bank buying, and expectations of softer real interest rates over the medium term support gold’s long-term outlook.

Bottom Line

While gold and silver prices have corrected sharply after touching record highs, experts believe the long-term story remains intact. Disciplined investors may view this fall as a strategic accumulation phase, but caution and patience remain key amid heightened volatility.