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The bullion market witnessed a major selloff on December 29, with gold, silver, and copper prices falling sharply from their peak levels. After weeks of strong gains and record highs, investors booked profits as geopolitical fears eased and prices surged beyond comfort levels. Analysts had already warned of volatility as metals entered the overbought zone.

Steep Declines Across Metal Futures

Gold, silver, and copper futures on the domestic exchange saw heavy losses on Monday:

• Gold futures (February expiry) dropped nearly 2% to ₹1,37,646 per 10 grams

• April and June gold contracts saw a similar decline

• Silver futures (March expiry) slipped 8% after touching a record high of ₹2,32,663 per kg

• Copper futures (January expiry) recorded the deepest fall, plunging 13% to ₹1,211.05 per kg

The sudden correction surprised many retail investors who had been tracking bullion’s rapid rally through much of 2025.

Four Major Reasons Behind the Metal Market Crash

1️⃣ Profit Booking at Record Price Levels

After extraordinary gains driven by global uncertainties, investors were waiting for the right exit point. Technical analysts say gold and other metals were trading at unsustainably high valuations.
Pranav Mer, Vice President – Commodity & Currency Research at JM Financial Services, noted:

“The kind of rally we saw in 2025 is unlikely to continue in 2026. Investors appear to be booking profits seeing prices at elevated levels.”

2️⃣ Geopolitical Tension Appears to Ease

Gold is widely considered a safe-haven asset. Its prices typically rise when global risks intensify.
However, the recent meeting between U.S. President Donald Trump and Ukraine’s President Volodymyr Zelenskyy in Florida boosted hopes of peace negotiations with Russia entering the final stage.
A reduction in war concerns has weakened the safe-haven appeal of gold and silver, weighing down their prices.

3️⃣ China Signals Restrictions on Physical Metal Supply

Reports indicate that starting in 2026, China plans to halt unrestricted physical supply of metals. Companies will require export licenses, and the rule is expected to remain in effect until 2027.
This sparked concerns about supply limitations in the global market. Elon Musk reacted to the news on social platform X, saying:

“This is not good. Silver is critical for manufacturing across several industries.”
Motilal Oswal analysts say this move could disrupt global availability of physical metals, influencing pricing dynamics.

4️⃣ CME Group Raises Margin Requirements

On December 26, U.S.-based CME Group — operator of major exchanges such as COMEX and NYMEX — increased the initial margin on March 2026 silver derivative contracts from $20,000 to $25,000.
This higher margin requirement means traders with insufficient balance could see forced liquidation of positions — triggering further selloff pressure on silver.

What Next for Investors?

With interest rate expectations shifting and market volatility likely to continue, experts believe metals could trade with caution in the near term.
However, long-term fundamentals remain solid due to:

✔ Industrial demand (especially for silver and copper)
✔ Central bank gold purchases
✔ Weak growth outlook in major economies

Investors are advised to avoid panic selling and focus on staggered investment strategies, considering both global cues and market risks.