Gold and silver prices have fallen sharply since their January 2026 peaks. MCX silver dropped about 57% from ₹4,20,048 per kg on 29 January to around ₹1,78,900 per kg by 30 October, while MCX gold fell about 23% from ₹1,80,779 to ₹1,38,419 per 10 grams.

In the national capital, the price of silver touched ₹1,90,200 per kg, its lowest in nearly 11 months, and 99.9% gold traded at around ₹1,45,200 per 10 grams, including taxes.

The steep correction in gold and silver prices has punctured the belief that bullion rises automatically whenever there are geopolitical tensions. There is underlying tension among policymakers as well. Reason? Weakening industrial and manufacturing activities.

Long viewed merely as gold’s volatile sibling, silver emerged as a central pillar of the global industrial and green-energy supply chain, driving massive price movements before market forces and technological adaptation reined in the rally.

Curious Case Of Silver

Over the past three years, silver has experienced a dramatic market trajectory, transitioning from quiet consolidation into a historic, speculative bull run, followed by sharp price corrections and structural realignments.

The setup for silver’s multi-year rally was rooted in structural market deficits. According to Washington-based The Silver Institute, the global silver market entered an unprecedented streak of annual supply deficits. Between 2021 and 2026, cumulative global demand outstripped total supply — including mine production and recycling — by over 760 million ounces (100 ounce is about 2.83 kg).

“Exceptionally strong physical demand, tight inventories, and robust industrial metal prices, copper in particular, fuelled silver’s outperformance of gold during that period. This trend eventually became self-fulfilling, as investors that had previously favoured gold shifted their attention to the white metal,” said the World Silver Survey 2026.

The China Factor

No single factor influenced silver’s dramatic surge more than China. As the epicentre of the world’s solar photovoltaic (PV) manufacturing, China transformed silver from an inflation hedge into an essential green-tech input.

The rapid conversion of Chinese solar manufacturers to TOPCon (Tunnel Oxide Passivated Contact) solar cells created a massive demand shock, as these advanced panels require significantly more silver paste per watt than older technology.

“In China, very strong March imports of silver likely reflected a front-loading of demand ahead of the removal of an export VAT rebate on photovoltaic (PV) products from 1 April. A destocking phase and a weakening in industrial demand has since persisted," said a J.P. Morgan report.

Once China stockpiled enough silver and stopped aggressive purchases, the demand dropped and also the prices. By late October 2026, silver prices stabilised near US$ 54 per ounce in the global market, marking a drop of over 50% from its historic high.

ETFs To The Rescue

The rally of gold and silver through 2024 and early 2025 was built on a combination of factors, including rising geopolitical uncertainty, massive purchases by the central banks, increasing demand of silver by the electronics and green industry, worry over rising inflation and weak confidence in sovereign instruments.

As the prices of gold and silver rose globally, fuelled by impressive projections articulated by leading investment bankers like Goldman Sachs and J.P. Morgan, the market became overcrowded with retailers the world over jumping onto the bullion bandwagon for quick returns.

For those who hesitated to invest and hold gold or silver in physical form, Exchange Traded Funds (ETFs) came to their rescue. It offered a viable investment alternative to small as well as large investors seeking protection from geopolitical tensions, trade uncertainty, inflationary concerns, and volatile equity markets.

In India, gold ETFs have grown exceptionally over the past three years. Their assets under management rose from about ₹344.55 billion in July 2024 to ₹1.73 trillion in July 2026, recording roughly a five-fold increase. The investor folios during the three-year period more than doubled to 12.5 million.

Net inflows reached ₹429.61 billion in 2025, and ₹459.25 billion in just the first nine months of 2026. Gold ETFs also delivered about 31% annualised returns over three years, strengthening investor interest.

Silver ETFs grew even faster than gold ETFs over the past three years, albeit from a smaller base. Their assets under management reached ₹776.76 billion till July 2026, up 238% year on year, while investor folios surged 429% to about 5.38 million.

The momentum accelerated sharply in FY2025-26, with silver ETFs attracting roughly ₹300.00 billion in net inflows—about 3.5 times FY2024-25’s total. Silver ETFs with a three-year history have delivered about 40% annualised returns, outpacing gold ETFs’ roughly 31% over the same period.

Although the tension in West Asia escalated after the joint military campaign by the US and Israel on Iran on 28 February, the prices of precious metals continued the downward slide. Both investors and speculators have been selling the metals that were supposed to protect them in times of crisis.

The big question now is whether this is merely a pause in a longer bull phase or the beginning of a prolonged period of underperformance? Are the prices of precious metals bottoming out or the decline will continue for some more time?

Impact On Domestic Industry

Falling gold prices are not an unambiguous benefit for the jewellery industry, micro, small, and medium enterprises (MSMEs) or exporters. They can improve affordability and reduce input costs, but they also trigger inventory losses, delayed buying, weaker investment demand, and margin pressure—especially for small firms with thin capital buffers.

For manufacturers and retailers, a price decline initially hurts the value of unsold inventory. Jewellers who bought gold at higher prices must either sell at lower realisation, accept lower margins, or hold stock in the hope of recovery. This is particularly damaging because gold jewellery businesses carry high-value, slow-turning inventory.

However, lower prices can revive consumer demand over time. Gold had become less affordable after a nearly 60% year-on-year price rise, pushing buyers toward lighter-weight, lower-carat and studded jewellery. A meaningful correction could therefore improve volumes, especially during weddings and festivals.

MSMEs are more exposed than large branded chains because they have limited working capital, weaker bargaining power, and less diversified revenue.

For exporters, the effect is mixed. Lower global gold prices can reduce the cost of gold used in export production and may improve competitiveness where contracts are priced in advance. But exporters often operate on thin margins and face a lag between procurement and shipment; sudden price declines can create losses on committed orders.

“Demand and market conditions remain challenging, particularly in the Middle East, an important destination for plain gold jewellery exports,” opined Kirit Bhansali, Chairman, Gem and Jewellery Export Promotion Council (GJEPC).

The Outlook

While The Silver Institute maintained a wide deficit outlook near 46.3 million ounces for 2026, major institutions offered far more conservative numbers. HSBC published a dramatically lower deficit projection of around 5 million ounces, pointing out that rising scrap recycling and rapid industrial thrifting were closing the supply gap far faster than headlines suggested.

As regards gold, not everyone is convinced that it will quickly regain its former momentum. The World Gold Council, however, sounded optimistic when it said, “Despite the pullback, gold remains one of the strongest-performing assets over the past year.”

The bullion market will not crash, but could disappoint investors expecting another decade of outsized returns. A prolonged sideways phase, punctuated by short rallies during geopolitical shocks, may continue in the years to come.

However, there’s a silver lining to the falling prices. Just ahead of the Dhanteras celebrations, Diwali, and the upcoming wedding season, the fall in prices has brought a sigh of relief to the Indian consumer.

India’s demand for the two precious metals is among the highest in the world. As per IBEF estimates, Indian households hold about 34,600 tonnes of cumulative gold stock, mostly in the form of jewellery.