Gold, silver reel from worst-ever rout ahead of Budget: What lies ahead for prices?
The Multi Commodity Exchange of India (MCX) will remain open for trading on Sunday, February 1, in a special session as the government presents the Union Budget 2026. The exchange will conduct a live trading session as per standard market timings.
Overall, the recent sharp correction in both gold and silver reflects a leverage-driven flush and sentiment reset rather than a reversal of the broader trend, says Ponmudi R, CEO of Enrich Money. While near-term volatility may persist due to dollar movements, disciplined buying at lower levels, guided by key support zones and broader channel trends, is expected to shape the next phase of the ongoing secular bull market into 2026.
On January 30, domestic gold mirrored the global selloff, retreating from highs near Rs 1,80,000+ to stabilise around Rs 1,49,500–Rs 1,49,653, reflecting a similar percentage decline. The contract is trading near the 20-day EMA, while the long-term upward channel remains intact. Key support lies in the Rs 1,40,000–Rs 1,45,000 zone, bolstered by the firm USD/INR backdrop. Holding above Rs 1,40,000 preserves the positive medium-term bias, while a sustained rebound above Rs 1,55,000 could reignite momentum toward Rs 1,65,000–Rs 1,80,000+ in the coming months, supported by domestic tailwinds and structural demand.
Domestic silver witnessed a sharp correction from record highs near Rs 4,20,048 per kg to the Rs 2,91,925–Rs 2,91,000 range. While volatility remains elevated, key structural support is seen around Rs 2,91,000, with stronger support placed near the Rs 2,51,000–Rs 2,52,000 zone, which aligns with the 50-day EMA. Industrial demand continues to offer relative strength, and a sustained move back above Rs 3,00,000–Rs 3,10,000 could indicate a return of buying interest, potentially pushing prices toward Rs 3,40,000–Rs 3,50,000 and higher amid supply constraints.
Further, CME Group has raised margin requirements on Comex gold and silver futures after prices recorded some of their sharpest declines in decades, a move aimed at safeguarding market stability amid heightened volatility.
Higher margin requirements typically have a cooling effect on gold and silver prices, especially in the near term, because they directly influence trader participation and leverage.First, trading becomes more expensive. When exchanges like CME raise margins, traders must deposit more collateral to hold the same positions. This often forces highly leveraged participants to either reduce their exposure or exit positions altogether.
According to an exchange statement issued Friday, margins for gold futures under the non-heightened risk profile will be increased to 8% of the underlying contract value from the current 6%. For positions classified under the heightened risk profile, margins will rise to 8.8% from 6.6%. Silver futures will see even steeper revisions. Margins for non-heightened risk positions will climb to 15% from 11%, while those under the heightened risk category will be raised to 16.5% from 12.1%. The exchange also announced margin increases for platinum and palladium futures, reflecting broader volatility across precious metals. The revised margin requirements will take effect from Monday’s close.
Despite the sharp pullback, the broader bullish outlook for gold and silver heading into 2026 remains intact, experts say. Key structural drivers continue to support the trend, including sustained central bank accumulation of gold and silver’s supply constraints amid rising industrial demand from sectors such as green energy, electric vehicles, artificial intelligence, electronics and solar. Ongoing geopolitical uncertainties and the push for diversification away from fiat currencies also continue to underpin sentiment.
Also read: CME raises gold, silver margins after steepest single-day plunges in decades
The recent correction is widely seen as a healthy reset that has helped clear excess leverage, speculative froth and overbought conditions, thereby creating room for more sustainable upside once sentiment stabilises and buying interest at lower levels returns.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
