By Tco News Desk
New Delhi, January 31, 2026 — With Finance Minister Nirmala Sitharaman set to present the Union Budget 2026-27 tomorrow, February 1, 2026, at 11:00 AM, all eyes in the precious metals market are on potential announcements that could sway gold and silver prices. Recent weeks have seen dramatic volatility in domestic bullion prices, with record highs followed by sharp corrections, amid speculation over customs duty changes, taxation norms, and broader economic policies.
Gold and silver prices in India have experienced extraordinary rallies in recent times. Since the previous budget, gold has reportedly surged around 100%, while silver has gained approximately 250%, driven by global safe-haven demand, geopolitical tensions, lower interest rate expectations, and a weaker rupee. In January 2026 alone, MCX gold and silver rose nearly 24% and higher, respectively, before a brutal profit-booking selloff hit the markets. On January 30, silver futures crashed as much as 27% in a single session—its steepest-ever drop—while gold saw its sharpest one-day decline in over a decade, down around 12%. Analysts attribute this to leverage unwinding, margin hike buzz from global exchanges like CME, a stronger US dollar, and pre-Budget caution.
The key question dominating discussions: Will the Budget impact gold and silver prices significantly? Experts remain divided but largely anticipate limited direct disruption unless major policy shifts occur.
A primary focus is on customs duties. Gold currently attracts a basic customs duty of around 6% (reduced from higher levels in prior adjustments to curb smuggling), with silver at approximately 7.5%, plus 3% GST. The gems and jewellery industry, facing subdued demand due to elevated prices, has lobbied for further reductions to ease manufacturing costs, boost exports, and revive domestic consumption. Industry leaders like Mangesh Chauhan of Sky Gold have emphasized rationalizing duties on gold, silver, platinum, and related inputs to enhance global competitiveness.
Some market participants speculate a duty cut could soften domestic prices, making jewellery more affordable and stimulating sales—potentially leading to short-term downside pressure on bullion. "Any announcement of an import duty cut to boost the jewellery market could trigger further declines," noted SEBI-registered commodity expert Anuj Gupta. Conversely, concerns over ballooning import bills (gold imports hit $58.9 billion and silver $9.2 billion in 2025 amid high prices) have fueled talk of a possible hike or enabling provisions for future adjustments, which could push prices higher and curb inflows.
Other potential measures include enhanced reporting requirements for gold holdings in income tax returns, self-declaration systems to track ornaments, or tweaks to capital gains taxation on gold investments (e.g., aligning holding periods for physical gold, ETFs, and funds). Such changes could indirectly affect investor sentiment without directly altering spot prices.
Experts largely view the broader trend as bullish into 2026. "The recent sharp correction reflects a leverage-driven flush and sentiment reset rather than a reversal of the broader trend," said Ponmudi R, CEO of Enrich Money. Structural factors—persistent inflation hedging, industrial demand for silver (especially in green energy, EVs, and solar), and global uncertainties—support upside potential, with key support levels likely to trigger rebounds.
For silver, which doubles as an industrial metal, Budget signals on infrastructure, renewables, and manufacturing could bolster long-term demand. "Budget 2026 could influence silver demand through import duty and policy changes," analysts noted, with prices at multi-year highs.
As markets brace for the Budget presentation—followed by a special trading session on commodities—volatility is expected to remain elevated. Traders and investors are advised to monitor live updates closely, as any surprise on duties, taxes, or sector incentives could dictate near-term direction. While a status-quo Budget might see prices stabilize or edge lower on profit-taking, experts say the long-term outlook for gold and silver remains intact amid supportive macro drivers.
The Union Budget 2026 arrives at a pivotal moment for India's economy, with growth projections around 7-7.5% and focus on capex, green energy, and consumption. How it addresses precious metals will be one of the most watched elements for retail investors, jewellers, and commodity traders alike.
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