Why Gold and Silver Slumped After The Union Budget 2026

Recently, the domestic gold and silver markets saw sharp price movements following the Government's announcement of the Union Budget for FY27. According to live market data, silver trading is near the ₹2.50–2.70 lakh per kg zone and gold is hovering around ₹1.40–1.48 lakh per 10 g, due to volatile investor sentiment and macroeconomic pressures.

This has pushed traders to reassess a critical question: is the post-Budget price correction in gold and silver temporary or the start of a deeper corrective phase?

What Drove Gold And Silver Prices After The Union Budget?

Below are some of the key observations on the prices of gold and silver after the budget was announced:

1. Sharp Drops In Futures Trade On Budget Day

In extended trading sessions, gold and silver futures on the Multi-Commodity Exchange of India (MCX) plunged, with both metals hitting lower-circuit limits — a rare technical event signalling aggressive selling. Gold April futures fell by ₹9,140 per 10 g (about 6 %) to close near ₹1,43,205 per 10 g. Silver March futures dropped ₹17,515 per kg (also 6 %) to about ₹2,74,410 per kg.

2. Broader Price Weakness

Other reports confirmed similar moves: gold futures slipped roughly 2–3% in subsequent sessions, while silver saw steeper cumulative declines, reflecting aggressive unwinding of leveraged positions rather than a collapse in long-term demand.

Further, the commodity sell-off coincided with wider risk-asset stress. Moreover, the key equity indices also slumped after the announcement, with the Sensex losing more than 1,100 points and Nifty50 retreating below 25,000. Further dampening the bullish risk sentiment.

3. Price Context

These budget-related moves were built on the recent price swings in precious metal. Just days earlier, silver prices hit an all-time peak near ₹4.20 lakh per kg, while gold climbed above ₹1.83 lakh per 10 g amid global safe-haven demand during tightening macro conditions.

From those elevated levels, the declines represented significant percentage moves — with silver down more than 30 % from peak to trough in some sessions and gold off roughly 18% from its recent highs.

4. Import Duties And Policy Signals

A key Budget decision that helped shape the commodities reaction was to leave customs duty on gold and silver imports unchanged. Importers continue to pay a 6% total duty (including basic customs duty and cess) and both metals remain subject to a 3% GST.

Analysts noted that the lack of reduction left bullion without a domestic structural demand boost at a time when global price pressures were already easing.

5. ETF And Exchange Reactions

Beyond futures, gold and silver exchange-traded products saw notable declines along with some ETFs sliding 15–16% alongside the sell-off. Moreover, MCX shares themselves fell about 15%. Thus, reflecting contagion from precious metal volatility and dislocations in risk asset pricing during the budget day session.

What Is The Future Outlook?

Analysts tracking MCX futures identified key technical support around ₹1.35–1.40 lakh per 10g for gold and ₹2.50–2.60 lakh per kg for silver — levels where fresh buying interest might stabilise prices if risk assets recover. Resistance levels were cited in the ₹1.45–1.50 lakh zone for gold.

Conclusion

The post-Budget 2026 reaction in bullion markets reflects the volatile futures trading and risk-off sentiment across asset classes. Certain announcements of the budget 2026-27, like unchanged import duties and GST, offered no fresh trigger to support bullion prices. This prompted the aggressive sell-offs after record highs. Apart from this, the elevated volatility, higher margin requirements and weakening global cues—particularly a stronger dollar and shifting rate expectations—intensified the sell-off.

However, the current volatility in the market is short-lived. Going forward, prices are likely to stabilise near technical support zones, with direction hinging more on global macroeconomic developments than domestic fiscal policy.

Source:

Economic Times

Moneycontrol

The Times Of India

Time of India

Livemint