Gold and silver prices have witnessed a sharp correction over the past month, even as geopolitical tensions remain elevated following the US-Israel conflict with Iran. The unexpected decline in traditional safe-haven assets has raised questions over whether the long-running bullion rally is nearing an end.
Gold prices have fallen about 16 percent over the past month, while silver has corrected more sharply by 27 percent. Analysts attribute the decline primarily to liquidity pressures in global markets and a reassessment of US Federal Reserve rate-cut expectations.
The recent sell-off in global equities has forced investors to liquidate positions in precious metals to meet margin calls, accelerating the fall in prices. At the same time, persistent inflation—partly driven by elevated crude oil prices—has led markets to scale back expectations of aggressive rate cuts by the US Federal Reserve.
This has strengthened the US dollar and pushed real yields higher, both of which typically act as headwinds for non-yielding assets such as gold and silver.
The correction comes after an extraordinary rally in 2025, when gold surged around 70 percent and silver rallied more than 150 percent—marking one of the strongest annual performances in over four decades.
Market experts believe the current decline reflects a natural consolidation phase rather than a structural reversal of the long-term trend.
Analysts suggest that the first leg of the bullion rally likely ended in January 2026, when the gold-silver ratio dropped to around 42, indicating peak outperformance in silver.
The market now appears to be in a cooling-off phase, with a liquidation cycle underway. This phase could continue until the gold-silver ratio rises towards 80, signalling a reset for the next leg of the rally.
The gold-silver ratio—an indicator of how many ounces of silver are required to buy one ounce of gold—is widely tracked by commodity investors to gauge relative valuations.
Historically, such consolidation phases in precious metals have lasted anywhere between a few months and several years.
The 1998 consolidation phase lasted nearly four years
The 2008 correction lasted about nine months
The duration of the current phase will largely depend on the trajectory of US equity markets and interest rates. Continued strength in US equities could delay a fresh uptrend in bullion.
Despite the near-term weakness, the broader macroeconomic backdrop remains supportive for precious metals. Key structural drivers include:
Elevated global debt levels
Ongoing currency debasement concerns
Diversification of global reserves
Strong central bank demand
These factors are expected to underpin prices over the medium to long term.
Market experts advise investors to adopt a cautious but optimistic approach.
Rather than chasing rallies, investors may consider accumulating gold and silver on declines. While short-term volatility may persist, the medium-term outlook remains favourable.
Gold is expected to trade in the $4,000–$5,600 per ounce range this year, with the potential to test higher levels if rate cuts materialise. Silver, if it sustains above key support levels, could see further upside in the coming quarters.
For now, investors are advised to hold existing positions, with fresh accumulation likely to be more attractive once the ongoing consolidation phase matures.