The Indian bullion market experienced a historic correction in gold prices on February 1, 2026, as the Union Budget was presented in Parliament. Following months of consistent rallies, the market saw heavy selling pressure on Budget Day. According to data from the Multi Commodity Exchange (MCX) and spot markets, gold prices tumbled from an all-time high of ₹1,80,779 to approximately ₹1,60,730 per 10 grams. This represents a total decline of nearly ₹31,704 from the peak, creating significant ripples across the domestic market.
Pre-Budget Market Volatility and Price Correction
Just ahead of the budget session, the Delhi bullion market recorded a massive single-day drop of ₹14,000 on Friday. According to Goodreturns, the price of 24-carat gold is now stabilizing around the ₹1,60,730 mark. 34% decline in international spot gold prices. According to analysts, uncertainty surrounding the budget and high expectations of an import duty cut have led buyers and traders to adopt a cautious stance.
Profit Booking and Global Economic Factors
According to analysts at HDFC Securities, the primary driver behind this significant slump in gold prices is profit booking by institutional investors. As prices reached their zenith, large-scale investors began liquidating their holdings to realize gains, which increased market supply and exerted downward pressure on prices. On top of that, the strengthening of the US Dollar on the global stage has dimmed the appeal of the yellow metal. Experts at InCred Money believe that discussions regarding a change in the US Federal Reserve leadership, specifically Donald Trump's nomination of Kevin Warsh, have pushed the Dollar Index higher, directly impacting the commodity markets.
Expectations of Import Duty Cuts and Policy Changes
The bullion and jewelry industry has high expectations from Budget 2026. There is strong speculation that the government may reduce the import duty on gold from the current 6% to 3% or 4%. If the Finance Minister announces such a cut, domestic gold prices could see further downward movement, while On top of that, there are rumors that the government might introduce new regulations regarding the disclosure of gold holdings in Income Tax Returns (ITR). According to research analyst Gaurav Garg, the current price reduction could stimulate demand in the upcoming wedding season, as Indian consumers are highly price-sensitive.
City-wise Gold Price Breakdown
Gold prices across major Indian metros show a general trend of decline, though minor variations persist due to local taxes, while in Delhi, 24-carat gold is priced at ₹1,60,730 per 10 grams, while 22-carat gold stands at ₹1,47,350. In Mumbai and Kolkata, 24-carat gold is trading at ₹1,60,580. Prices in Chennai remain slightly higher at ₹1,62,550. Cities like Lucknow, Kanpur, and Jaipur are mirroring the prices seen in the national capital. Analysts suggest that these prices may fluctuate further once the final budget proposals are analyzed.
Market Analysis and Conclusion
According to market experts, this correction in gold prices was technically necessary as the market was in an overbought zone. The combination of a strong dollar and shifts in global geopolitical dynamics has prompted investors to look beyond gold as a safe-haven asset. Domestically, the final budget announcements and the government's stance on import duties will dictate the trajectory of gold prices for the coming months.
Disclaimer
This article is for informational purposes only and shouldn't be construed as financial or investment advice. Consult a certified financial advisor before making any investment decisions.