MCX gold falls over 7%, silver plunges 15% for third straight session; Here is why precious metals are crashing

During the special Budget trading session on Sunday, the yellow metal contracts (April expiry) fell 3.16%. It had tanked by ₹31,617, or 17.2%, to close at ₹1,52,345 per 10 grams on Friday, after hitting a record high of ₹1,93,096 per 10 grams on Thursday, January 29.

At around 12:56 pm, the safe-haven metal contract was trading 4.94% or ₹47,303 lower at ₹1,40,450 per 10 grams.

Similarly, silver contracts for the March expiry plunged as much as 15% or ₹39,847 to the session’s low of ₹2,41,744 per kilogram on the MCX.

The white metal plunged 9% on Sunday, February 1. On Friday, it had slumped ₹1,07,968, or 27%, to close at ₹2,91,925 per kilogram, also touching its lower circuit level. The sharp sell-off followed Thursday's record peak of ₹4,20,048 per kilogram.

At the time of writing, the metal was trading 14.17% or ₹37,652 lower at ₹2,28,000 per kilogram.

Why are gold and silver crashing?

Precious metals prices witnessed a sharp neck-breaking rally before crashing on Friday. The rally, driven by geopolitical uncertainties, came crashing amid profit booking, mainly following the nomination of Kevin Warsh as the next US Federal Reserve chief.

This nomination dampened investor sentiment as traders view him as a hawkish policymaker who is more likely to prioritise inflation control and maintain tighter monetary conditions. The current US Fed Chair Jerome Powell’s term will expire in May 2026.

Furthermore, as per news reports, the CME has announced a second margin hike in three days for all precious metals, with maintenance margins set to rise by 33% for gold futures, 36% for silver futures, 25% for platinum futures, and 14% for palladium futures, effective Monday, February 2, 2026.

In response, MCX also changed its margins, with bullion gold at 20% and silver at 25%. This came into effect on Sunday, February 1.