Just before the Union Budget 2026, gold and silver prices in India are under intense scrutiny from investors, the jewelry industry, and ordinary consumers. Finance Minister Nirmala Sitharaman is scheduled to present the Union Budget on February 1, 2026, which falls on a Sunday this year. Therefore, the market’s true reaction will only be visible from the following Monday. After a record-breaking surge in January, gold and silver are now in the spotlight due to a sudden and sharp decline, fueling speculation about a major announcement regarding customs duties in the budget.
Sharp decline in gold prices at the end of January
On January 30, 2026, gold prices witnessed a sharp decline. The price of 24-karat gold fell by ₹9,650 per 10 grams to ₹169,200, while 100 grams of gold dropped by ₹96,500 to ₹1,692,000. Similarly, 22-karat gold fell by ₹8,850 per 10 grams to ₹155,100, and 18-karat gold declined by ₹7,240 to ₹126,900.
While this decline might seem alarming, the truth is that by the end of January 2026, gold had still delivered returns of over 25 percent across all purities. This means that gold remains a profitable investment for long-term investors.
Silver also sees a sharp decline, but returns remain strong.
Along with gold, silver prices also experienced significant fluctuations. The price of 1 kg of silver saw a drop of up to ₹50,000 at one point. Currently, silver is trading at ₹3,95,000 per kg, a decrease of ₹15,000. However, in cities like Chennai, Hyderabad, and Kerala, silver is still above ₹4 lakh, at around ₹405,000 per kg.
Despite this recent decline, silver has delivered an impressive return of approximately 66 percent, clearly indicating that investor interest remains strong in the long term.
What is the real reason for the sudden drop in prices?
According to experts, both gold and silver had reached overbought zones. This means prices had risen too quickly, making profit-taking inevitable. This led to significant profit booking by investors. In addition, the strengthening US dollar also put pressure on precious metals.
Globally, geopolitical tensions, fears of trade wars, and economic uncertainties have not yet subsided. This is why, despite the current decline, the outlook for gold and silver is still considered bullish in the long term.
Budget Day will be a major trigger.
The Union Budget 2026 will play a crucial role in determining the direction of gold and silver prices in February. The market is closely watching to see if the government announces another reduction in customs duty. If this happens, it could provide relief to domestic prices and give a significant boost to the jewelry industry.
Expert View: How Much Volatility Could Continue?
According to Jatin Trivedi, VP Research Analyst (Commodity and Currency) at LKP Securities, gold witnessed a massive sell-off after margins were raised on the international market, CME. Prices fell from a peak of $5,500 to around $5,000. Meanwhile, gold on MCX fell from a record high of ₹180,000 to reach close to ₹155,000 intraday.
He says this volatility could persist for the next few sessions. Technically, CME gold could remain in the $4,800 to $5,200 range. If there is a break below $4,800, prices could even reach $4,500. MCX gold could hover between ₹158,000 and ₹170,000 until stability returns to the market.
What are the jewelry industry’s expectations from Budget 2026?
The gems and jewelry sector has several key expectations from Budget 2026-27. According to Mangesh Chauhan, Managing Director of Sky Gold, the industry expects steps from the government that will reduce costs, simplify trade processes, boost domestic demand, and strengthen India’s global competitiveness.
He stated that in the current global environment, where tariff pressures and supply chain changes are being observed, pragmatic and growth-oriented reforms are crucial for industry stability and employment.
Customs duty reduction is the biggest demand.
The industry’s biggest demand is to rationalize import duties on gold, silver, platinum, and other essential inputs. Lower customs duties will reduce manufacturing costs, provide better pricing for exporters, and make Indian products more competitive in the global market.
Additionally, simplification of customs procedures, faster clearance, digital documentation, and risk-based inspections can reduce logistics costs.
What happened in the last budget?
In Budget FY25, the full budget presented after winning the general elections, Finance Minister Nirmala Sitharaman reduced the overall customs duty on gold imports from 15 percent to 6 percent. The duty on gold ore was reduced from 14.35 percent to 5.35 percent. The duty on platinum and silver bars was also reduced to 6.4 percent and 6 percent, respectively.
At that time, this decision boosted demand in the jewelry sector, although gold and silver prices saw a temporary decline.
GST and the Tourist Refund Scheme are also under scrutiny.
At the domestic level, the industry also wants relief regarding GST. Currently, jewelry attracts a 3% GST, which is being demanded to be reduced to 1 to 1.25%. This will lower prices for consumers, increase formal sales, and broaden the tax base.
There are also calls for the early implementation of the Tourist GST Refund Scheme at major airports so that luxury retail spending remains within India.
Could major relief be forthcoming on February 1st?
All eyes are now on February 1st, 2026. If the Finance Minister once again cuts customs duty on gold and silver, it could have a significant impact on the market. This budget could prove to be crucial for investors, businesses, and consumers alike.
Budget 2026 will determine whether gold and silver will remain safe investments in the coming months or whether prices will see further fluctuations.
