CHENNAI: Gold and silver prices retreated sharply in the week leading up to the Union Budget 2026, with both precious metals ending as much as 13 percent lower on profit-booking and a strengthening US dollar, after having scaled record highs in recent sessions. The sudden reversal marks one of the steepest weekly corrections in the bullion market in years and has shifted near-term sentiment from euphoria to caution.
The sell-off followed a powerful rally through much of January, during which gold and silver attracted strong inflows on safe-haven demand, expectations of easier global monetary policy and geopolitical uncertainties. Prices had risen rapidly, pushing technical indicators into overbought territory. As the US dollar recovered and bond yields edged higher, traders moved swiftly to lock in gains, triggering a wave of profit-taking across global and domestic markets.
In the domestic Indian bullion market this week, prices swung wildly as the earlier rally gave way to a sharp correction. On the Multi Commodity Exchange (MCX), gold futures for February delivery slipped about 9 per cent from recent peaks and were trading around ₹1,49,000 per 10 grams by the end of trading, down from levels that had briefly crossed near ₹1.8 lakh per 10 grams during the rally.
Retail 24-carat gold prices similarly eased from their highs, with quotations around Rs 16,900–Rs 17,000 per gram in major cities such as Delhi and Mumbai on the final trading day after falling by nearly Rs 965 per gram from the previous session’s prices. Silver experienced even steeper moves, with MCX silver futures falling roughly 25 percent on the week to about Rs 2,91,900 per kilogram from levels above Rs 4 lakh per kg that were recorded at the peak of the rally. City-wise retail silver prices in some centres were observed near Rs 3.94–Rs 4.04 lakh per kg on the last trading day, reflecting the deep volatility as investors rapidly unwound positions amid profit-booking and firmer global cues.
On the international front, gold prices pulled back sharply from their recent all-time highs, while silver, which tends to be more volatile, witnessed deeper losses. In India, bullion futures mirrored the global trend, with gold and silver on the Multi Commodity Exchange recording double-digit percentage declines from their recent peaks. Market participants said silver’s sharper fall reflected a combination of heavy speculative positioning and its dual role as both a precious and industrial metal, which makes it more sensitive to shifts in global growth expectations.
A firmer US dollar has been a key headwind. As the greenback strengthens, commodities priced in dollars become more expensive for holders of other currencies, reducing demand. At the same time, higher US Treasury yields diminish the appeal of non-yielding assets such as gold and silver. Together, these factors have weighed on bullion even as broader macroeconomic uncertainty persists.
Volatility has also been driven by changing expectations around the future path of US monetary policy. Investors are reassessing how quickly and how far interest rates could move, and any perception that policy may remain tighter for longer tends to pressure precious metals. This reassessment has coincided with a broader risk-off mood in some global markets, adding to selling pressure in bullion.
Domestically, attention is firmly on the Union Budget 2026 and the possibility of changes to import duties on gold and silver. Any reduction in customs duty could soften local prices and stimulate physical demand, particularly from jewellers and retail buyers who have been deterred by elevated price levels in recent months. Conversely, the absence of such relief could keep domestic prices relatively high compared with international benchmarks, even after the recent correction.
Despite the sharp fall, industry participants say the broader long-term fundamentals for gold and silver remain supportive. Central bank purchases of gold have been strong in recent years, reflecting efforts to diversify reserves. In India, structural demand driven by weddings, festivals and investment preferences continues to provide an underlying floor to consumption, although buyers have become more price-sensitive.
Silver’s outlook is additionally influenced by its growing use in industrial applications such as solar panels, electric vehicles and electronics. This industrial demand is expected to expand over the medium term, which could help cushion prices once the current bout of volatility subsides.
In the near term, however, markets are likely to remain choppy. Traders will closely track global macro cues, movements in the US dollar, and signals from central banks, along with any Budget-related announcements that affect bullion imports or taxation. While the recent correction has eased some of the froth built up during the rally, sentiment remains fragile, and further swings cannot be ruled out.
Overall, gold and silver enter the Budget week on a weaker footing after a dramatic reversal from record highs. Whether this pullback proves to be a temporary consolidation or the start of a deeper correction will depend on how global financial conditions evolve and whether domestic policy provides any catalysts to revive demand.