Precious metals see profit booking: Here's why analysts prefer gold over silver in 2026; check support levels

Gold and silver prices sharply declined on December 29, after seeing a strong bull run that propelled them to fresh lifetime highs. Analysts have weighed on what lies ahead for the precious metals in the upcoming year.

Easing geopolitical tensions and China's export restrictions were among the four key reasons behind the downturn in gold and silver prices today.

Gold futures with February expiry fell around 2 percent after nearing their lifetime high levels to Rs 1,37,646 per 10 grams. The futures with April and June expiries also fell nearly 2 percent after hitting fresh all-time highs earlier during the day.

Silver futures with March expiry dropped 8 percent after hitting a fresh lifetime high to Rs 2,32,663 per kilogram. The futures with May and July expiries also erased all gains, falling 9 percent and 10 percent respectively after hitting fresh lifetime highs during the day.

What triggered today's fall in gold and silver prices?

The sell-off was triggered largely by profit-taking and margin hikes by CME Group on silver futures, which forced liquidation, said Nirpendra Yadav, Senior Commodity Research Analyst at Bonanza. This makes today’s pullback more of a short-term correction following extraordinary gains, rather than a breakdown in fundamentals, he said.

The current correction in gold and silver prices can be viewed as a typical technical correction that has followed record levels and unwind forced leverages rather than a change in a bull market, said Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara.

What lies ahead?

Profit-taking pressure remains high and markets often retrace after parabolic moves, Yadav added. "Silver's sharp fall also reflects margin requirement changes, which can exaggerate swings. Geopolitical risks and rate expectations will keep bullion volatile. Gold could continue elevated towards $5,000+ if Fed remains dovish and safe-haven demand persists. Silver is seen as volatile but potentially rising, possibly toward $90–$100/oz in 2026 if industrial demand stays robust and the gold-to-silver ratio compresses.

According to Ross Maxwell, Global Strategy Operations Lead, VT Markets, a correction in precious metals would not necessarily be a bad thing after such a sustained and strong performance. “A pullback driven by temporary optimism around growth or rates could make both metals more attractive and create opportunities for investors by resetting valuations. If underlying concerns such as debt sustainability, currency credibility, or geopolitical risk remain then the overall picture does not change and any pullback offers good opportunities for investors to enter,” he added.

Gold, silver prices likely to be erratic in short term:

“Going forward in the short term, gold/silver markets are likely to remain erratic in price as markets respond to correction in profits and macro indicators. In the medium-term perspective, fundamental factors such as rate views, safe-haven considerations, and industrial demand in silver and copper would keep fair value strongly in excess of historic ranges,” Maurya said.

The broader trend remains volatile as markets reassess positions after the recent sharp rally, said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities. “This week, the Federal Reserve’s meeting minutes will be a key trigger, while the U.S. holiday period could keep trading volumes relatively thin. Gold is expected to remain volatile in the range of ₹1,35,000–₹1,42,000 in the near term,” he added.

Why gold may perform better than silver in 2026?

Maxwell believes that gold would be the better core allocation for investors heading into next year, mainly because it offers more stability and clearer support from macroeconomic risks. “Gold’s role as a monetary hedge, its appeal during periods of financial uncertainty, and continued interest from central banks give it a structural advantage over silver. Silver does offer greater upside potential but comes with higher volatility due to its reliance on industrial demand. When global growth is uneven, that sensitivity can work against it,” he said.

Explaining what the bull and bear cases might be for the precious metals, Maxwell said that the positive outcome would involve falling real interest rates, persistent fiscal stress, renewed financial instability, and continued diversification away from traditional reserve currencies.