Gold and silver prices in India cool slightly, but investors eye dips ahead of Union Budget 2026, which could trigger sharp market reactions.

Gold and silver prices in India have cooled slightly after hitting record highs earlier this week, but levels remain elevated, keeping investors attentive ahead of the Union Budget 2026 on February 1. Analysts say the budget could significantly influence bullion markets, potentially creating new entry points for buyers.

Market Overview

MCX February gold futures are trading near Rs 1.69 lakh per 10 grams, down from an intraday lifetime high of around Rs 1.80 lakh on January 29. The pullback has tempered the recent buying frenzy without diminishing investor interest. Silver has experienced a milder retreat, with MCX March silver futures easing from around Rs 4.08 lakh per kg to roughly Rs 4.05 lakh, still well above January levels.

Global Trend Mirrors India

Internationally, gold futures surged past $5,600 per ounce but have corrected by high single-digit to low double-digit percentages while remaining far above early January rates. Silver also cooled after reaching around $120 per ounce. These movements have widened the price gap between Indian and global bullion, which domestic investors are monitoring closely.’

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India’s heavy reliance on imported bullion amplifies price volatility. The country imports nearly all of its gold and over 80% of its silver, contributing to significant foreign exchange outflows and influencing the trade deficit. Rising imports also played a role in pushing the rupee to record lows this month, a factor that could shape post-budget price movements.

Investment vs. Jewellery Demand

While jewellery buying has slowed due to high prices, investment demand for gold is surging. Gold ETFs nearly tripled in 2025, with net inflows exceeding Rs 40,000 crore, as investors sought safety amid weak equity returns. Silver ETFs are growing even faster, driven by demand for higher momentum and portfolio diversification.

Budget Buzz and Import Duties

Speculation over customs duties is adding suspense to the bullion market. Markets recall 2012-2013, when high import duties and a weakening rupee pushed prices upward. Last year, the government reduced gold and silver duties from about 15% to 6%, aiming to curb smuggling and align domestic prices with global levels.

Industry groups now call for further reductions, while policymakers weigh the impact of high imports on the rupee. Jaipur Jewellers Association member Manish Khunteta noted that relief in customs duty would benefit both buyers and sellers, especially as wedding purchases now often exceed the Rs 2 lakh PAN limit.

For now, the basic customs duty on gold remains around 6%, with no official announcement yet. Analysts predict that the Union Budget 2026, to be presented on February 1, could tilt the market in either direction, triggering sharp reactions in gold and silver prices when trading resumes on Monday.

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