Gold, silver price crash: Amid the massive slump in gold and silver rates on Sunday, February 1, a steeper decline was visible in gold and silver exchange-traded funds (ETFs) of up to 20% as the Indian stock and commodity markets opened for a special trading session on Budget 2026.
Gold prices crashed 9% on MCX in intraday trading on Sunday to ₹136,185 per 10 grams. MCX Silver rate today also tanked 9% to ₹265,652.
Analysts said a rebound in the dollar drove the selloff in the precious metals. Additionally, CME Group is raising margins on Comex gold and silver futures, pressuring international prices, which rubbed off on the metal rates back home.
Gold, silver ETFs tumble
Against this backdrop, gold ETFs declined up to 13%, with Nippon India ETF Gold BeES down 11%, ICICI Pudential Gold ETF down 13%, Zerodha Gold ETF down 10.9%, and Angel One Gold ETF 12%.
Silver ETFs faced a steeper decline of up to 20% as SBI Silver ETF was down 20.50%, ICICI Pru Silver ETF lost 20.14%, and Axis Silver ETF 20.16%.
What should investors do?
For gold and silver ETF investors, this phase calls for discipline rather than reaction, said Harshal Dasani, Business Head, INVasset PMS.
“The recent volatility, especially in silver, has been driven largely by leverage unwinding and margin-related liquidations, not by any deterioration in the long-term macro or monetary backdrop. Investors already holding exposure should avoid panic exits during forced sell-offs, as these phases tend to overshoot on the downside,” said Dasani.
At the same time, fresh allocations should be staggered and calibrated, not deployed in lump sums after sharp rallies or corrections, he advised.
Gold, with its lower volatility, continues to play a portfolio stabiliser role, while silver remains a higher-beta asset that requires tighter position sizing, he said.
Abhinav Tiwari, Research Analyst at Bonanza, said that the recent two-day “flash crash” in gold and silver, triggered by a hawkish US Fed nominee and increased margin requirements, is viewed by many as a necessary cooling of “overbought” markets rather than a trend reversal.
Despite the volatility, the long-term outlook remains structurally bullish, he opined. Record central bank buying, silver’s persistent supply deficit, and geopolitical tensions provide a solid floor.
“However, a significant domestic risk looms with Budget 2026: a potential import duty hike to curb the trade deficit. While such a move could spike local prices in the short term, it may also dampen physical demand, shifting the bullish play toward digital gold and silver ETFs,” he said.
Sriram B K R, Senior Investment Strategist, Geojit Financial Services, said that the recent decline in gold and silver ETFs is primarily a reflection of the fall in international gold and silver prices, particularly on 30th January 2026, as seen in LBMA prices.
This decline has translated into ETF markets today, as exchanges are open due to the Union Budget session, with 1st February being the immediate working day following the international market correction, he said.
“Prices are still at elevated levels. If supported by new, sustainable fundamental factors, they may hold, though the current signals are mixed. Global tensions and uncertainty may continue to support gold as long as they persist. Both asset classes appear due for a price consolidation, though timing such a move is extremely difficult. We continue to advise investors not to chase recent rallies and instead remain disciplined with asset allocation. Investors should exercise caution at these levels,” he said.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions.
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