Mumbai, Feb 1: Gold and silver prices witnessed a sharp sell-off on Sunday as investors rushed to book profits following an unprecedented rally over the past year. The decline was driven by a mix of global and domestic factors, including higher margin requirements, a stronger US dollar, and expectations of policy changes in the upcoming Union Budget.
On the Multi Commodity Exchange (MCX), gold February futures plunged 7.12 per cent to ₹1,39,000 per 10 grams around 10 am in intraday trade. Silver March futures fared even worse, tumbling nearly 9 per cent to ₹2,65,652 per kg.
Adding to the pressure, CME Group announced an increase in margin requirements for Comex gold and silver futures after steep price declines. Margins for gold futures under the non-heightened risk profile have been raised to 8 per cent of the contract value from 6 per cent, while margins under the heightened risk profile have been increased to 8.8 per cent from 6.6 per cent. Higher margins compel traders to park more capital upfront, curbing speculative activity.
Internationally, spot gold prices were on track for their steepest single-day fall since 1983, while silver headed toward its worst daily performance on record. A strengthening US dollar further dampened sentiment for precious metals.
Domestic factors also weighed on prices, as investors factored in expectations of a possible customs duty cut on gold and silver in Budget 2026.
Analysts noted that MCX gold futures faced strong rejection near the ₹1,80,000–₹1,81,000 zone, followed by an aggressive breakdown, signalling short-term trend exhaustion. However, they remain constructive on gold’s long-term outlook.
In silver, the sharp fall invalidated the bullish channel, pointing to panic unwinding of leveraged positions. Analysts said momentum indicators flipped rapidly from extreme overbought to oversold, reflecting structural instability rather than a healthy correction.
In the near term, silver faces key support at ₹2,60,000–₹2,55,000, while any pullback toward ₹3,00,000–₹3,10,000 is likely to attract selling pressure. Volatility is expected to remain elevated, with a bearish bias in the short run.
