Gold and Silver Prices Crash: Silver Plunges ₹1.36 Lakh, Gold Down ₹31,000 in Major Sell-Off

The Indian bullion market witnessed a dramatic weekend as gold and silver prices experienced a massive freefall, wiping out gains from a months-long rally. In just two trading sessions, silver plummeted by a staggering ₹1.36 lakh per kg, while gold prices retreated by ₹31,000 per 10 grams.

This "bloodbath" on the Multi Commodity Exchange (MCX) comes at a critical juncture, as the nation tunes in for the Union Budget 2026 presentation.

Massive Correction: A Two-Day Downward Spiral

The decline has been swift and severe. On January 29, silver was trading at a record high of ₹4.01 lakh per kg; by Sunday morning, it had crashed to ₹2.65 lakh. Similarly, gold, which touched ₹1.69 lakh earlier in the week, tumbled to ₹1.38 lakh per 10 grams.

While the futures market (MCX) saw the most volatile swings, the physical bullion market also felt the heat. According to the India Bullion and Jewellers Association (IBJA), 24-carat gold fell to ₹1,65,795, while silver dropped to ₹3,39,350 per kg.

Why are Gold and Silver Prices Falling?

Market analysts point to a "perfect storm" of domestic and global factors triggering this correction:

1. Heavy Profit Booking: After hitting historic highs, investors moved quickly to liquidate positions and lock in profits.

2. Budget Anticipation: Speculation regarding a potential cut in import duties in the Union Budget 2026 has led to cautious selling.

3. CME Margin Hikes: The Chicago Mercantile Exchange (CME) recently increased margin requirements—gold from 6% to 8% and silver from 11% to 15%. This forced traders to either cough up more cash or sell their holdings, further fueling the price drop.

4. US Policy Shifts: The nomination of Kevin Warsh as the new US Federal Reserve Chair—perceived as an "inflation hawk"—has strengthened the US Dollar, typically a bearish signal for precious metals.

Expert Insights: Is it Time to Buy?

Commodity expert Anuj Gupta notes that while the volatility is high, the margin hikes have created a liquidity squeeze. "Traders unable to meet the new deposit requirements are being forced to exit, creating a snowball effect on prices," he explained.

For retail consumers, this dip may look like a golden opportunity, but experts advise a "wait and watch" approach until the Budget announcements are finalized.

Essential Tips for Buyers:

• Check for BIS Hallmarking: Always ensure your gold has the 6-digit HUID (alphanumeric code) to guarantee purity.

• Verify Daily Rates: Prices fluctuate by the second on the MCX. Use the IBJA website to track the latest "spot" prices for 24K, 22K, and 18K gold.

• The Silver "Home Tests": Since silver is highly conductive, ice should melt faster on it than on other metals. Additionally, pure silver is non-magnetic.

Conclusion

The current volatility in gold and silver prices highlights the sensitivity of the bullion market to global policy and domestic fiscal changes. As the Union Budget 2026 unfolds, all eyes remain on Finance Minister Nirmala Sitharaman to see if duty rationalization will provide long-term stability or further stir the markets.