Gold corrects sharply in March, driven by global risk-off moves
Gold prices declined in March 2026, falling around 7% in India and about 11% in dollar terms. The correction was attributed to a combination of a stronger US dollar, elevated bond yields, and broad-based liquidation across asset classes.
The report noted that gold was also impacted by margin-related selling as investors raised liquidity during simultaneous declines in equities, bonds, and currencies. ETF outflows and reduced speculative positioning further added to the pressure.
Despite geopolitical tensions in West Asia, which typically support bullion, gold prices remained under pressure due to global risk aversion being concentrated in liquidity needs rather than safe-haven allocation.
The depreciation of the Indian rupee helped cushion domestic prices, limiting the fall compared with international markets.
Near-term consolidation expected
The outlook for gold is for a narrow trading range in the short term, with expected price swings of about 5%, as markets adjust to a pause in US interest rate actions and persistently higher yields.
The report highlighted that while near-term drivers remain mixed, structural factors continue to support long-term demand. These include elevated global debt levels, persistent inflation risks, currency weakness concerns, and geopolitical fragmentation.
Silver declines on weak industrial demand
Silver also witnessed selling pressure during the period, underperforming gold due to its exposure to industrial demand cycles. The metal was impacted by weaker sentiment in industrial commodities and concerns over global growth.
The report cited reduced activity in sectors such as solar energy and manufacturing, along with liquidation of long positions, as factors that eased earlier supply tightness in the market.
A stronger US dollar and higher bond yields also contributed to reduced investment demand.
Dual nature of silver adds to volatility
Unlike gold, silver’s pricing is influenced by both industrial and investment demand. This makes it more sensitive to economic cycles and changes in manufacturing activity.
The fund house noted that cyclical weakness in industrial demand can amplify price volatility during periods of global economic uncertainty.
Structural demand drivers remain intact
Despite near-term pressure, the long-term outlook for silver remains supported by structural demand. Industrial usage in solar panels, electronics, medical devices, and green technologies continues to expand.
Silver’s relatively lower price compared to gold also supports its role as an inflation hedge for retail investors.
Strategy remains staggered allocation
The report suggested staggered investment in both gold and silver, reflecting expectations of continued volatility in the near term. It added that recent sharp price movements highlight the potential for periodic corrections following rapid rallies.
Overall, the outlook remains cautious in the short term but steady over the longer horizon, driven by macroeconomic and structural demand factors.
