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The bullion market is witnessing an extraordinary rally, with both gold and silver touching fresh record highs.

On Tuesday, gold surged past Rs 1,20,600 per 10 grams on the Multi Commodity Exchange (MCX), while silver also recorded a sharp jump of more than Rs 2,200 in a single day.

The rally has sparked excitement among traders and investors, but market experts caution that the sudden spike reflects panic buying rather than stable fundamentals.

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Gold prices have been climbing consistently over the past few weeks, and the latest surge has taken it to historic levels.

On MCX, gold futures crossed Rs 1,20,600, while in the international market, COMEX gold prices moved above $986 per ounce.

This extraordinary rally has come without any major fresh triggers, which has left many analysts surprised at the sheer pace of the price rise.

Commodity experts believe that the market is running on sentiment rather than fundamentals.

Factors such as US economic uncertainty, the possibility of interest rate cuts, central bank buying, and geopolitical tensions have contributed to the bullish momentum.

However, experts emphasise that these reasons alone do not justify such a steep and sudden rise in prices.

According to Zee Business’s Commodity Editor Mrityunjay Kumar Jha, the current rally has the hallmarks of a “panic-driven surge.” He explained that the market is in overbought territory, and such parabolic moves are often followed by sharp corrections.

He pointed out that gold prices have already surged more than 50% in the past nine months, which is an unprecedented rise.

While the fundamentals are supportive of higher prices, the current speed of the rally is not sustainable. Any easing in global uncertainties, such as a resolution to the US shutdown, softer geopolitical tensions, or a delay in rate cuts, could trigger a significant correction in both gold and silver.

With Diwali and the wedding season approaching, many retail investors may be tempted to invest in gold and silver, hoping to capture quick gains. However, experts strongly advise caution.

Mr Jha stressed that new investors should avoid buying at such inflated levels with the expectation of short-term profits. “Do not assume that because gold rose 50% in the last nine months, it will rise another 50% in the next nine months. Such expectations are unrealistic,” he said.

Instead, investors should consider gold as a long-term asset. Buying through systematic investment plans (SIPs) or accumulating gold gradually for long-term wealth protection is advisable. But chasing quick returns in this overheated market could be risky.

Silver has also joined the rally, hitting an all-time high. Prices have climbed by more than 65% this year alone, reflecting even stronger momentum than gold.

On Tuesday, silver rose over Rs 2,200 in a single day, marking one of the steepest intraday jumps in recent years.

Manoj Kumar Jain, Director at Prithvi Finmart, expects the volatility to persist in the near term.

"On MCX, gold has support at Rs 1,19,100–1,18,000 and resistance at Rs 1,21,000–1,22,200, while silver has support at Rs 1,46,200–1,45,000 and resistance at Rs 1,48,800–1,50,000. We suggest buying silver around Rs 1,47,000 with a stop loss at Rs 1,45,400 for a target of Rs 1,50,000," he said.

His analysis highlights that while the market is overheated, disciplined strategies and strict stop-loss levels can help traders navigate the volatility.

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Anubhav Maurya

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