Mumbai: Gold prices rose strongly on Tuesday after suffering one of their steepest falls in years, as investors returned to the market following two days of heavy selling.
In global trade, spot gold climbed more than 3 percent, while silver gained over 6 percent. The rebound came after both metals dropped sharply earlier in the week, triggered by a stronger US dollar and changes in market expectations about future US interest rates.
The recent fall began after news related to leadership changes at the US Federal Reserve and higher trading margin requirements raised by the CME Group. These moves led many investors to cut their positions quickly, causing a sudden drop in prices.
Traders said the latest rise was mainly driven by bargain buying. After such a steep fall, investors saw an opportunity to re enter the market at lower prices. Analysts also said the rebound does not mean the market has fully recovered and warned that price swings may continue in the short term.
Despite the recent volatility, long term confidence in gold remains firm. Major banks and market experts say demand from central banks and investors seeking protection from inflation and global uncertainty continues to support gold prices.
In India, domestic gold prices also moved higher, reflecting the global trend. Dealers said local buyers were cautious but active after the recent correction, especially ahead of the wedding season.
Market participants are now watching US economic data and currency movements closely. Any fresh signals on interest rates or inflation could influence the next move in gold prices.
For now, gold has recovered part of its losses, but traders say the market remains sensitive and could see more sharp movements in the days ahead.