Precious Metals Tumble as Budget Day Trading Begins

Gold and silver prices have extended their sharp declines, with futures contracts on the Multi Commodity Exchange of India (MCX) falling sharply in Sunday’s special trading session. This session was held specifically for the presentation of the Union Budget 2026. The continued sell-off signals a major correction in the precious metals market, putting investors on high alert.

A Steep Decline for Silver and Gold

Silver futures have been hit particularly hard, plunging another 6% in early trade. This follows a significant drop recorded on Friday, meaning the metal has lost substantial value in a very short period. Gold has not been spared, with futures prices dropping by approximately Rs 9,100 per 10 grams. This two-day decline represents one of the most pronounced corrections in recent months, erasing gains built over the previous weeks.

The primary forces behind this sudden drop are profit-taking and a stronger US dollar. After a strong rally, many investors are choosing to lock in their gains, creating selling pressure. Simultaneously, a firmer US dollar makes dollar-denominated commodities like gold and silver more expensive for holders of other currencies, which dampens international demand and pulls prices lower.

Budget Day Volatility and Duty Concerns

The timing of this decline is crucial, as it coincides with the special MCX trading session for the Union Budget. Historically, budget announcements can cause significant volatility in commodity markets, especially for gold and silver. Investors are keenly watching for any changes to import duties on these metals.

Any increase in the import duty would make bringing gold and silver into India more expensive. This typically supports higher local prices compared to global benchmarks. Conversely, a cut in duty could align Indian prices more closely with falling international rates, potentially extending the current downturn. The uncertainty surrounding this potential policy shift is adding an extra layer of caution to the market.

What Should Investors Consider Now?

For investors, this volatile period requires a measured approach. The sharp correction may present a buying opportunity for those with a long-term view, but catching a falling knife can be risky. It is often prudent to wait for the market to show signs of stabilization after such a steep drop.

More immediately, all attention should be on the Budget announcements. The government’s decisions on import duties will provide critical direction for local precious metal prices in the coming days and weeks. Investors should avoid making large, new bets until this policy clarity emerges.

In summary, the precious metals market is undergoing a significant technical correction driven by profit-taking and dollar strength, amplified by Budget-day jitters. The path forward for gold and silver prices in India will now heavily depend on the fiscal measures announced by the government. A cautious stance, focusing on risk management and awaiting policy details, is the most sensible strategy for investors at this moment.