Daijiworld Media Network – Chennai
Chennai, Jan 31: Gold and silver prices witnessed a sharp correction ahead of the Union Budget 2026, with both precious metals ending the week significantly lower after a strong rally through January. Market watchers attributed the sudden fall to heavy profit-booking and a strengthening US dollar, which together triggered one of the steepest weekly declines seen in recent years.
After scaling record highs in recent sessions on the back of safe-haven buying, expectations of easier global monetary policy and lingering geopolitical uncertainties, bullion prices turned volatile as traders moved quickly to lock in gains. With the dollar gaining strength and bond yields inching higher, the sell-off gathered pace across both global and domestic markets.
On the Multi Commodity Exchange (MCX), gold futures for February delivery slipped nearly 9 per cent from recent peaks and were trading around ?1,49,000 per 10 grams by the end of the week. Retail 24-carat gold rates also eased in major cities, with prices hovering around Rs 16,900–Rs 17,000 per gram in Delhi and Mumbai after a sharp drop from previous highs.
Silver saw an even steeper correction. MCX silver futures reportedly fell about 25 per cent over the week to around Rs 2,91,900 per kg, down from levels above Rs 4 lakh per kg during the peak of the rally. Retail silver prices in some centres were quoted near Rs 3.94–Rs 4.04 lakh per kg on the final trading day, reflecting the heightened volatility as investors unwound positions.
Internationally too, gold pulled back from all-time highs, while silver — known for sharper swings — witnessed deeper losses. Analysts said silver’s bigger fall was also linked to speculative positioning and its dual nature as a precious and industrial metal, making it more sensitive to global growth cues.
A firmer US dollar has emerged as a key headwind, as dollar-priced commodities become costlier for buyers using other currencies. At the same time, rising US Treasury yields reduced the appeal of non-yielding assets like gold and silver, further pressuring prices.
In India, market focus has now shifted to the Union Budget 2026 amid expectations of possible changes in import duties on bullion. Traders believe any reduction in customs duty could bring down local prices and revive physical demand, especially from jewellers and retail buyers who had stayed cautious due to elevated rates.
Despite the steep fall, industry participants maintain that the long-term outlook for bullion remains supportive, citing steady central bank gold purchases and consistent domestic demand linked to weddings and festivals. Silver demand is also expected to benefit over time from its growing industrial use in solar panels, EVs and electronics.
For now, however, bullion markets are expected to remain volatile, with traders tracking global cues, currency movements, interest rate expectations and Budget-related announcements for the next direction.