On February 1, gold and silver futures witnessed a steep decline on the Multi Commodity Exchange (MCX), extending the heavy selling pressure seen on Friday. Profit-booking by investors and a stronger US dollar weighed heavily on market sentiment.

Due to the presentation of the Union Budget 2026, MCX remained open for a special trading session on Sunday. Around 10:00 AM, MCX Gold was trading near ₹1,40,000 per 10 grams, down by nearly 6.7%. Meanwhile, MCX Silver slipped to ₹2,65,701 per kilogram, marking a sharp decline of around 9%.

With international markets closed, global cues were absent. As a result, domestic factors—particularly budget-related developments—were expected to drive price movements. After touching record highs earlier this week, precious metals have cooled off slightly. However, prices are still elevated, keeping investors closely watchful of every market move.

While the recent correction has reduced panic buying, investor interest remains strong. Many market participants are viewing the dip as a potential buying opportunity.

Strong US Dollar Pressures Precious Metals

One of the key reasons behind the sharp fall was news related to the US Federal Reserve, which boosted the US dollar. The correction followed the announcement by former US President Donald Trump nominating Kevin Warsh as the next Federal Reserve Chair. The move reinforced confidence in the central bank’s independence, pushing the dollar index above the 97 level.

A stronger dollar generally puts pressure on gold prices since gold is priced internationally in US dollars. When the dollar strengthens, gold becomes more expensive for foreign buyers, leading to reduced demand and lower prices.

How Do Gold and Silver Prices Impact India?

India imports almost all of its gold requirements and more than 80% of its silver consumption. Therefore, fluctuations in global prices directly affect domestic markets. Over the past year, a significant portion of foreign exchange reserves was spent on importing precious metals, contributing to a widening trade deficit.

Additionally, the Indian rupee recently touched record-low levels, which could further influence price trends in the post-budget period.

Shift in Buying Patterns: Investment Over Jewellery

High prices have slowed jewellery demand to some extent. However, investment demand for gold and silver has surged. In 2025, assets under management in gold ETFs nearly tripled, as investors poured over ₹400 billion into these instruments amid weak equity market returns.

Silver ETFs witnessed even stronger inflows, driven by investors seeking higher-growth alternatives beyond gold.

Technical Outlook: What Experts Say

According to Ponmudi R, CEO of Enrich Money, MCX Gold futures faced strong resistance near ₹1,80,000–₹1,81,000, triggering heavy selling pressure. Prices subsequently slipped toward the ₹1,36,000 level, indicating aggressive profit-taking rather than a healthy correction.

He added that gold must hold above the ₹1,32,000–₹1,35,000 range to avoid further downside. Until prices reclaim the ₹1,45,000 mark, caution is advised in the near term.

Why Did Silver See a Steeper Fall?

Silver prices displayed a classic “blow-off top” after reaching a record high near ₹4,20,000. This was followed by a sharp correction, with futures falling to around ₹2,84,000, signaling panic selling from leveraged positions.

The ₹2,60,000–₹2,55,000 zone now acts as a crucial support area. Any rebound toward ₹3,00,000–₹3,10,000 may face fresh selling pressure, keeping short-term volatility elevated.

Will Prices Fall Further?

Despite the sharp correction, market experts remain positive on the long-term outlook for both gold and silver as markets move toward 2026. Strong central bank buying, ongoing geopolitical risks, and diversification away from fiat currencies continue to support gold prices.

Silver, on the other hand, benefits from tightening supply and rising industrial demand from sectors such as green energy, electric vehicles, artificial intelligence, electronics, and solar power.

For now, experts advise investors to remain cautious in the short term and closely monitor price stability and key support levels before taking fresh positions.