Indian gold and silver Exchange Traded Funds (ETFs) faced a significant downturn today, Monday, February 2, 2026. Silver ETFs plunged by as much as 20 percent in intraday trading, while gold ETFs saw declines between 6 and 11 percent. This sharp fall comes after a historic crash in global precious metal prices, triggering widespread profit-booking and unwinding of leveraged positions.Benchmark equity indices, however, showed a partial rebound after a volatile Budget day session.[business-standard+3]
Precious Metals Face Steep Decline
The dramatic drop in Indian precious metal ETFs directly reflects a severe correction in global gold and silver prices. Global silver prices crashed nearly 37 percent on Friday, January 30, marking the biggest single-day fall ever recorded for the white metal.Gold prices in international markets also declined by over 9 percent on Sunday.This global sell-off stemmed from several factors, including a stronger US dollar and the nomination of former Federal Reserve Governor Kevin Warsh, known for his hawkish stance on interest rates, to head the American central bank.Such a nomination often signals a period of higher interest rates, which can make non-yielding assets like gold and silver less attractive to investors.[angelone+2]
The Multi Commodity Exchange (MCX) saw gold March 5 futures down 5 percent at ₹1,37,390 per 10 grams on Monday, while March contracts for MCX silver dropped 6 percent to ₹2,49,713 per kilogram. This extended a slide that began last week, with gold correcting nearly 20 percent from its peak of ₹1,82,500 to around ₹1,47,800, and silver experiencing an even sharper 36 percent decline from ₹4,20,000 to approximately ₹2,65,650. On Sunday, MCX silver futures had already decreased by ₹26,273, or 9 percent.[business-standard+1]
Many Indian silver ETFs, including Edelweiss Silver ETF and Axis Silver ETF, hit their 20 percent lower circuit limits early on Monday. Other silver ETFs from fund houses like HDFC, Nippon India, Kotak, and ICICI Prudential also saw declines between 18 and 20 percent. Gold ETFs such as Aditya Birla Sun Life Gold ETF and Motilal Oswal Gold ETF crashed more than 9 percent.[m+5]
The CME Group's announcement of increased margins on its metal futures, effective after market close on Monday, is also expected to further weigh on precious metals. COMEX gold futures margins have increased from 6 percent to 8 percent, and COMEX 5000 silver futures are set to rise from 11 percent to 15 percent.[business-standard+2]
Jateen Trivedi, Vice President Research Analyst - Commodity and Currency at LKP Securities, advised caution. "Gold is expected to remain volatile but relatively more stable compared to silver, which may continue to witness exaggerated swings," he said. "A watch-and-learn approach is better until volatility subsides and price structures stabilize." Abhinav Tiwari, a Research Analyst at Bonanza, viewed the "flash crash" as a necessary cooling of "overbought" markets rather than a trend reversal. He noted that the long-term outlook remains bullish due to record central bank buying, silver's supply deficit, and geopolitical tensions. Siddharth Srivastava, Head - ETF Product & Fund Manager at Mirae Asset Investment Managers (India), suggested trimming overallocation to precious metals. He stated, "While it is prudent to wait for further information and trend confirmation, we currently prefer gold from a relative risk-reward perspective."[tradingview+2]
Broader Market Volatility After Budget
The broader Indian stock market also experienced significant volatility around the Union Budget 2026, which Finance Minister Nirmala Sitharaman presented on Sunday, February 1. The budget included measures aimed at boosting manufacturing, offering long-term tax incentives for global data centers, and supporting agriculture and tourism.[thehindu+1]
However, a hike in the Securities Transaction Tax (STT) on equity derivatives negatively impacted market sentiment. This led to the 30-share BSE Sensex plunging 1,546.84 points, or 1.88 percent, to close at 80,722.94 on Sunday. The 50-share NSE Nifty also tanked 495.20 points, or 1.96 percent, settling at 24,825.45. Foreign institutional investors (FIIs) offloaded equities worth ₹588.34 crore on Sunday.[thehindu+8]
Despite the sharp decline on Budget day, Indian benchmark indices showed signs of recovery in early trade on Monday. The Sensex climbed 302 points to 81,024.94 during initial trading, while the Nifty rose by 59.25 points to 24,884.70. This rebound was attributed to value-buying in blue-chip firms. However, the market remains volatile as investors continue to analyze the budget's fine print. Shrikant Chouhan, Head Equity Research at Kotak Securities, commented on the market's current state. He said, "The short-term market texture is volatile, and volatility is likely to continue in the near future. Hence, level-based trading would be the ideal strategy for day traders."[thehindu+3]
Upcoming RBI Monetary Policy Meeting
Looking ahead, market participants are closely watching the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) meeting. The MPC will convene from February 4 to February 6, 2026. Most market experts anticipate that the RBI will maintain a steady stance on interest rates, keeping the repo rate at 5.25 percent. This expectation follows cumulative rate cuts of 125 basis points since February 2025. The RBI's commentary on inflation, liquidity, and economic growth will be crucial for providing cues on the future policy trajectory.[livemint+6]
The significant decline in commodity-based ETFs, coupled with the broader market's digestion of the Union Budget and anticipation of the RBI's policy decision, sets a complex trading environment for Indian investors this week.[goodreturns]
