Gold at ₹1.38 Lakh: Should You Buy the Dip? Historic Crash on Budget Sunday Stuns Investors

Gold and silver prices witnessed a dramatic crash on Sunday, February 1, 2026, as the Multi Commodity Exchange (MCX) opened specially for trading ahead of Finance Minister Nirmala Sitharaman’s Union Budget presentation. Both metals slammed into their lower circuit limits, erasing weeks of gains in hours and sparking panic among investors.

MCX gold futures (April delivery) plunged up to 9%, dropping around ₹13,700 per 10 grams to trade near ₹1,38,600–₹1,40,000 levels at points during the session. Silver futures fell similarly by about 9%, shedding roughly ₹26,000 per kg to hover around ₹2,65,600 per kg. This marked one of the sharpest single-day corrections in recent memory, following Friday’s already brutal sell-off.

The bloodbath extended from global markets, where spot gold tumbled nearly 9% and silver plunged even steeper, driven by a stronger US dollar and shifting Fed expectations.

What Triggered the Massive Sell-Off?

Two major factors fueled the panic:

1. Global Dollar Surge After Trump’s Fed Pick
   President Donald Trump’s nomination of Kevin Warsh – viewed as an inflation hawk – as the next Federal Reserve Chair boosted the US dollar index. A stronger dollar typically pressures gold and silver prices downward, as these metals are priced in USD. Warsh’s hawkish stance raised bets on tighter monetary policy, reducing gold’s appeal as an inflation hedge. This triggered heavy liquidation worldwide, with Comex gold dropping sharply and dragging MCX prices lower.

2. Budget Jitters Over Customs Duty Cut
   Traders aggressively sold off positions fearing FM Sitharaman might announce a reduction in customs duty on gold and silver imports (currently around 6%). Lower duties could flood the market, curb smuggling, and push domestic prices closer to international levels – but at the cost of short-term pain for holders. Speculation intensified as the Budget speech approached, prompting profit-booking after months of record highs.

MCX imposed strict margin hikes and circuit limits to manage volatility, while related ETFs saw drops of 10–16% in early trade.

Should You Buy the Dip Now?

For many in Telangana and across India – especially those eyeing gold for weddings, festivals, or long-term savings – today’s crash feels like a rare “sale.” Physical 24-carat gold in cities like Hyderabad and Mumbai hovered near ₹1,38,000–₹1,40,000 per 10 grams (excluding making charges and GST), down significantly from recent peaks above ₹1,80,000+.

Pros of buying now:

• Prices have corrected sharply from overbought levels.
• Long-term outlook remains bullish due to geopolitical risks, central bank buying, and inflation concerns.
• If duties stay unchanged or rise, rebound could be swift post-Budget clarity.

Cons and cautions:

• Volatility remains high – further dips possible if Budget delivers duty cuts or dollar strength persists.
• Short-term traders face risks from margin calls and circuit halts.
• Always buy from trusted jewelers; consider digital gold or ETFs for liquidity.

Analysts suggest a staggered approach: Buy small quantities now for immediate needs (like jewelry), but wait for Budget confirmation before large investments. If Sitharaman maintains or tweaks duties favorably, prices could stabilize or recover quickly.

This Budget Sunday crash has turned heads – turning what was a “priced out” dream into a potential entry point for many.

The precious metals market now awaits post-Budget reactions. For everyday investors, today’s dip might just be the opportunity they’ve waited for.