The shares of gold financier stocks and silver producer Hindustan Zinc will remain in focus on February 1 amid a sharp crash in gold and silver prices. This comes as investors actively await how markets will react to Union Budget 2026, which is set to be presented by Finance Minister Nirmala Sitharaman today.
Gold and silver prices have seen a significant decline in the second half of last week, after scaling fresh lifetime highs just before.
Gold futures with April expiry on MCX dropped around 9 percent to hit a low of Rs 1,67,406 per 10 grams on Friday. This came a day after the contracts hit a fresh lifetime high of Rs 1,93,096 per 10 grams. This means that the gold futures fell 13 percent (Rs 25,690 per 10 grams) in just one day.
Silver futures with March expiry meanwhile dropped nearly 17 percent to Rs 3,32,002 per kilogram on Friday. This marks a fall of nearly 21 percent (Rs 88,046 per kilogram) in just one day after hitting a fresh lifetime high of Rs 4,20,048 per kg.
Spot silver on COMEX dropped around 30 percent in two days to close at $85.250 per ounce on Friday. Spot gold meanwhile fell around 13 percent during the same period to close at $4,879.60 per ounce.
The sharp fall in global prices of the precious metals on Friday came amid speculations that the US Federal Reserve may get a more hawkish chair.
Later during the day, the speculations did come true as US President Donald Trump said he had chosen former Federal Reserve Governor Kevin Warsh to head the American central bank.
As a result, gold and silver exchange traded funds (ETFs) mirrored the sharp fall and plunged as much as 24 percent after a sharp run-up.
Muthoot Finance shares plunged 7 percent to close at Rs 3,818 apiece on Friday. The shares of other gold financiers like Manappuram Finance and IIFL Finance meanwhile fell around 4 percent each.
The shares of Multi Commodity Exchange of India (MCX) tumbled more than 6 percent to end the session at Rs 2,515 apiece on Friday. Hindustan Zinc, which is the largest producer of silver in India, and produces refined silver with a minimum 99.9 percent purity, saw is shares crash around 12.5 percent to Rs 626 apiece. Vedanta shares dropped more than 11 percent.
Last week’s sharp fall in gold and silver prices can be explained as a classic bout of profit-booking after an extended record rally and not as a breakdown in fundamental sentiments, said Pranav Koomar, Founder and CEO of PlusCash.
While high positioning, strong dollar movements, and an uptick in bond yields have contributed to a correction in gold prices, from a medium- to a long-term perspective, the prices have continued to find support due to global uncertainty, buying from Central Banks, and tight supply dynamics, the analyst added.
Investors should consider any fall as a buying opportunity and not a sign of any change in the trend, Koomar said.
Maneesh Sharma, AVP - Commodities & Currencies, Anand Rathi Shares & Stock Brokers, noted that the sharp moves in precious metals seen today reflected speculation that Warsh may be less enthusiastic to cut rates than other candidates, given his past warnings of inflation risks and more recent calls for the Fed to reduce its balance sheet.
"Going ahead markets could now look ahead to more cues from labor market reports due next week in US which could show signs of weakening labor markets, while local markets could remain glued towards Union budget announcement due on Sunday. Any signs of changes in Import duty structure could reflect directly into MCX prices. Overall volatility with a corrective bias is expected to persist for few more sessions before markets stabilize at lower levels," Sharma added.
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