If overweight, book partial profit to curtail volatility risk

Instead of seeking quick profit, investors must go for SIPs with minimum 7-year horizon

- SANJAY KUMAR SINGH

After a sharp run-up, gold and silver recently saw a correction.

Gold fell from ₹1,74,638 per 10 gram on January 29 to a low of ₹1,48,150 on February 2 2026, a decline of 15.2 per cent. It has since recovered to ₹1,51,469 (as of February 6). The correction in silver was even sharper: it fell from ₹3,79,988 per kg on January 29 to 2,44,929 on February 6, 2026, a decline of 35.5 per cent.

What caused the correction?

Investor frenzy and FOMO (fear of missing out)-driven buying led to a sharp run-up in prices. Experts say the rally was overstretched and prices had moved into bubble territory. "Prices had risen too quickly and the market was primed for a correction," says Siddharth Srivastava, head -ETF product & fund manager, Mirae Asset Investment Managers (India). As investors who had made money booked profits, the market fell.

Geopolitics also played a part. Markets had priced in the possibility of a strike by the United States (US) on Iran. "When those fears did not materialise, the war premium began to unwind," says Deveya Gaglani, senior research analyst - commodities, Axis Securities.

The policy narrative shifted as well. The market had been discounting a dovish monetary policy outlook. The nomination of Kevin Warsh as the next Federal Reserve chair by President Donald Trump triggered a reassessment of US monetary policy path and the outlook for the dollar.

Once the price correction began, exchanges began to raise their margin requirements, leading to forced liquidations in a highly leveraged market. "Once prices started to fall, derivative trades unwound and exits piled up," says Srivastava. Silver saw higher pressure than gold as speculative positions had built up through derivatives.