Gold and silver prices slumped as much as nine per cent each on the Multi Commodity Exchange (MCX) on Sunday, February 1, 2026, extending the sharpest two-day sell-offs in precious metals in recent history.
The sell-off comes amid intense Budget Day speculation around possible changes in import duties, unsettling bullion markets and leaving traders and jewellers watching for cues on whether the correction offers a buying opportunity or signals a deeper setback for India’s jewellery trade.
The April Gold futures on MCX slipped as much as 9 per cent, or Rs 13,711 to hit the lower circuit at Rs 1,38,634 per 10 grams. Meanwhile, March Silver futures also tumbled up to 9 per cent, or Rs 26,273, to hit the lower circuit at Rs 2,65,652 per kilogram.
Silver had crashed as much as 37 per cent intraday on Friday, January 30, while global gold prices plunged 12 per cent in the spot market. The fall in gold marked its biggest single-session drop since the early 1980s, while the collapse in silver was the sharpest ever recorded.
The sharper fall overseas came after Indian equity markets had closed for the weekend, triggering a violent gap-down on MCX when trading resumed. Exchange-traded funds (ETFs) are now staring at another round of price resets after losing 15–20 per cent on Friday.
The crash has now brought focus on the Union Budget 2026, with bullion traders closely watching for any announcement on import duties. At present, gold and silver bars attract about 6 per cent basic customs duty and 3 per cent goods and services tax (GST), taking the total tax incidence to roughly 9 per cent. This is already lower than earlier years, when duties were close to 15 per cent and had encouraged large-scale smuggling.
The buzz is now centred on whether the Finance Minister will cut the basic customs duty from 6 per cent to 4 per cent. Such a move could pull domestic gold prices down by Rs 2,000–3,000 per 10 grams and reduce silver prices by around Rs 6,000 per kg, provided global prices remain stable.
Precious Metals Should Be Held Strictly As Diversification Assets
Precious metals should be held only as diversification assets and not treated as risk-free or return-generating investments, market experts said.
Devina Mehra, founder, chairperson and managing director of First Global, said the sharp fall in gold and silver once again highlighted that precious metals are not true safe-haven assets. In a post on X, she noted that history shows gold and silver have often been more volatile than equities and have seen brutal sell-offs from their peaks, with recoveries taking years, and in some cases decades.
She said she had repeatedly highlighted this risk in past interviews, but her views were often dismissed.
Mehra added that while precious metals have a role in portfolios, they should be held strictly as diversification assets rather than being treated as guaranteed stores of safety or investments that cannot lose value. She cautioned investors against believing that “this time it is different”, calling it a dangerous assumption not just in equity markets but across asset classes.
Should Investors Grab On The Opportunity Now
Akshat Garg, head of research and product at Choice Wealth, said the sharp fall in gold and silver ETFs may look alarming but does not change the broader investment case for precious metals. He said the decline appears to be more of a sentiment-driven shock than a fundamental break, coming after a strong run-up over the past year.
According to Garg, the fall reflects a combination of profit-booking, global volatility and reactions to macro cues, with ETFs often amplifying price swings on volatile days. He added that investors need not panic, stressing that gold and silver should be viewed as portfolio hedges rather than short-term trading bets. Garg said that for investors with a sensible allocation, staying invested makes sense, and that staggered buying during corrections is a better strategy than chasing rallies, noting that volatility tends to test emotions more than long-term plans.
