Gold Prices Drop After Record Highs – Is This the Start of a Bigger Crash?

Gold and silver prices fell on February 27 due to weak global trends and subdued local demand. The 24K gold rate dropped to ₹87,810 per 10 grams, while 22K gold fell to ₹80,490. Silver declined by ₹100 to ₹97,900 per kg. Earlier, gold had hit an all-time high of ₹88,090 but slipped due to profit-taking. In the international market, spot gold dropped to $2,907 per ounce. MCX gold futures declined to ₹85,625, while silver futures settled at ₹95,993. Analysts cite U.S. economic policies and inflation data as key factors. Further declines may test the $2,800 support level.

Gold Prices Drop After Record Highs – Is This the Start of a Bigger Crash?

Gold and silver prices saw a decline on February 27 due to weak global market trends and reduced local demand. The 24K gold rate dropped to ₹87,810 per 10 grams, while 22K gold fell to ₹80,490 per 10 grams. Silver also declined by ₹100, settling at ₹97,900 per kg, as industrial demand weakened. Earlier in the week, gold had reached an all-time high of ₹88,090 per 10 grams before retreating due to profit-taking.

In early Asian trade, spot gold fell by 0.31% to $2,907 an ounce. Across major Indian cities, Delhi recorded 24K gold at ₹87,960 per 10 grams and 22K gold at ₹80,640 per 10 grams, while Mumbai, Chennai, and Kolkata had similar rates of ₹87,810 and ₹80,490, respectively. Silver prices, which had already dropped ₹3,000 per kg the previous day, continued their downward trend, influenced by weak global sentiment and a shift in U.S. policies favoring fossil fuels.

Gold futures on the Multi Commodity Exchange (MCX) for April opened lower at ₹85,733 per 10 grams, down ₹141 from the previous close of ₹85,874. The price further dipped to an intra-day low of ₹85,625 before stabilizing at ₹85,625, reflecting a ₹249 or 0.29% drop. Earlier this month, gold futures had reached a record ₹86,592 per 10 grams.

Similarly, silver futures for May started weak at ₹96,141 per kg, down ₹402 from the previous close of ₹96,543, dipping further to ₹95,966 before closing at ₹95,993, marking a 0.57% decline. Silver futures had hit a historic high of ₹1,00,081 per kg last year. In the international market, gold prices also showed weakness, with COMEX gold trading around $2,914.5 per troy ounce, while spot gold stood at $2,899.63 per ounce.

The recent decline in gold prices follows a sharp increase earlier in the week, largely driven by concerns over trade conflicts. However, subdued demand and profit booking have led to a downward correction. Chennai, which experienced a surge in gold prices ahead of Maha Shivaratri, saw a significant drop in rates. On February 26, 22K gold was priced at ₹80,500 per 10 grams, while 24K gold stood at ₹87,820 per 10 grams. Over the past week, gold rates have fluctuated, with February 25 marking the peak at ₹88,090 for 24K gold and ₹80,750 for 22K gold. Silver, too, faced a substantial decline, falling ₹2,000 per kg on February 26 to ₹1,06,000 per kg.

Market analysts link the price fluctuations to global economic trends, particularly movements in the U.S. dollar index. Spot gold saw a minor recovery on Wednesday, rising 0.1% to $2,918.01 per ounce, while U.S. gold futures gained 0.5%, reaching $2,932.50 per ounce. Spot silver remained steady at $31.74 per ounce.

On the MCX, gold futures for April 2025 dipped slightly to ₹85,619, while silver futures for March 2025 saw a marginal gain of 0.04%, closing at ₹93,889. Looking ahead, gold prices may continue to experience volatility, with investors closely watching the U.S. Personal Consumption Expenditure (PCE) Price Index, a key inflation measure that could influence the Federal Reserve’s interest rate decisions.

Analysts suggest that if the downtrend persists, gold prices could test the $2,800 support level in the near future. Factors such as a stronger U.S. dollar, rising bond yields, and reduced safe-haven demand amid improving economic conditions could contribute to further declines. Investors are closely monitoring inflation data and Federal Reserve policy signals for future price movements.