Gold, Silver Cool Off From Record Highs as Budget Watch Intensifies

GG News Bureau
Mumbai, 31st Jan: Gold and silver prices in India have retreated from the record peaks hit earlier this week, but levels remain elevated enough to keep investors closely tracking every move ahead of the Union Budget on February 1.

The pullback has cooled the sharp rally seen in recent sessions without dampening interest, as many investors view the correction as a potential entry point. On the Multi Commodity Exchange (MCX), gold futures for February delivery are trading near Rs 1.69 lakh per 10 grams, after touching an intraday lifetime high of around Rs 1.80 lakh on January 29. The swift correction dragged prices sharply lower before they stabilised.

Silver has seen a relatively milder retreat. MCX March silver futures have eased from around Rs 4.08 lakh per kilogram to nearly Rs 4.05 lakh, but remain significantly higher than levels seen at the start of January.

Global markets are showing a similar pattern. International gold futures, which had surged beyond USD 5,600 per ounce, have corrected by high single-digit to low double-digit percentages, though they continue to trade well above early January levels. Silver, after touching highs near USD 120 per ounce, has also cooled as traders booked profits.

India’s heavy dependence on imported bullion amplifies the impact of global price swings. The country imports almost all the gold it consumes and over 80 per cent of its silver. Rising bullion imports have widened the trade deficit and contributed to pressure on the rupee, which recently touched record lows—factors that could influence post-Budget price behaviour.

Demand trends are also evolving. Jewellery buying has softened under the weight of high prices, while investment demand has risen sharply. Gold ETF assets nearly tripled in 2025, with net inflows estimated at over Rs 400 billion, as investors sought safety amid muted equity market returns. Silver ETFs have expanded even faster, reflecting appetite for higher momentum plays.

Speculation around customs duty has added to market suspense. Last year’s Budget reduced gold and silver import duties from about 15 per cent to roughly 6 per cent to curb smuggling and narrow the gap with global prices. Industry bodies are now seeking further cuts, while policymakers are weighing concerns over import-led pressure on the rupee.

Jewellers say customers are closely watching the Budget. Jaipur Jewellers Association member Manish Khunteta said any relief in customs duty would help both buyers and sellers, as elevated prices continue to strain household budgets. Experts have also suggested raising the Rs 2 lakh PAN threshold for jewellery purchases, noting that even routine wedding buys now exceed that limit.

For now, the basic customs duty on gold remains around 6 per cent, with no official indication of a change. Markets expect bullion prices to react sharply once trading resumes after the Budget announcement.