Gold Silver Market Meltdown: International and National Issues Crisis Impacts on Bullion Prices in Budget 2026

The first week of February 2026 has witnessed one of the most violent structural realignments in the history of the Indian bullion market. Just days after gold and silver hit unprecedented lifetime highs—with gold touching ₹1,93,096 per 10 grams and silver soaring to ₹4,20,048 per kg on January 29—the market has experienced a brutal reversal. In a span of just 48 hours, gold and silver prices plunged by nearly 20% and 36% respectively on the Multi Commodity Exchange (MCX), wiping out approximately $5 trillion in global market capitalization.[1, 2]

​At TMLabs India, our focus on the "Tech-First" roadmap—as illustrated in our recent news studio analysis (see Image 4) showing the shift toward semiconductor manufacturing and cloud infrastructure—provides the necessary context for this meltdown. While the national budget prioritized digital growth, the bullion market was left to grapple with a "perfect storm" of international leadership changes and domestic policy shocks.

​The International Crisis: The "Warsh" Pivot at the Federal Reserve

​The primary international trigger for the bullion crash was U.S. President Donald Trump’s nomination of Kevin Warsh as the next Chair of the Federal Reserve.[3, 4] Markets were caught off guard by the choice of Warsh, who is widely regarded as a "reputable inflation hawk" with deep ties to Wall Street.[3, 5, 4]

​In economic terms, an "inflation hawk" is a policymaker who prioritizes price stability and is more likely to favor higher interest rates to temper inflation.[3, 6] Since gold and silver are non-yielding assets, their attractiveness is inversely correlated with interest rates. The nomination signaled to the world that the era of aggressive interest rate cuts might be coming to an end sooner than expected.[7, 3] Immediately following this news, the U.S. Dollar Index (DXY) surged above 97, making bullion significantly more expensive for foreign buyers and triggering a massive liquidation of "long positions".[8, 1, 9]

​Global Diplomacy: The Greenland De-escalation at Davos

​Throughout late 2025 and January 2026, gold and silver prices carried a massive "war premium" due to the Greenland Crisis. Tensions between the U.S., Denmark, and the EU reached a breaking point, with threats of military annexation and 25% punitive tariffs on key allies who opposed the U.S. acquisition of the island.[10, 11, 12] These threats created a "risk-off" environment where investors piled into silver and gold for safety.[12]

​However, this "safe-haven" support collapsed on January 21, 2026, during the Davos conference. A "framework of a future deal" was announced following a meeting with NATO Secretary General Mark Rutte, effectively removing the threat of immediate military action and trade wars.[10, 11, 13] As the threat of global conflict vanished, the speculative capital that had flowed into bullion as a "crisis haven" began to exit rapidly, stripping away the geopolitical risk premium that had artificially inflated silver to over ₹4 lakh per kg.

​National Issues: The Budget 2026 "SGB Tax Trap"

​While global factors set the stage, the Indian Union Budget 2026-27 delivered a knockout blow to domestic sentiment through a fundamental change in the taxation of Sovereign Gold Bonds (SGBs).[14, 15]

​Finance Minister Nirmala Sitharaman proposed that the capital gains tax exemption on SGBs will now be restricted. Effective April 1, 2026, tax-free capital gains at maturity will only be available to individuals who:

• ​Subscribed to the bond at the time of the original issue by the RBI.
• ​Held the bond continuously until its redemption on maturity.

​This policy effectively "killed" the SGB premium in the secondary market overnight. Investors who purchased SGBs on stock exchanges—paying a 10-15% premium specifically for the tax advantage—suddenly found themselves facing a 12.5% Long-Term Capital Gains (LTCG) tax hit.[16, 15, 17] This realization triggered a massive sell-off in paper gold that spilled over into the physical market.[16, 15]

​National Policy: Import Duty Stagnation and the "Tech-First" Roadmap

​The bullion industry had high expectations for a reduction in gold and silver import duties from 6% to 4% to help ease record-high domestic prices. However, the government chose to prioritize fiscal discipline and infrastructure over bullion relief, maintaining the import duty at 6% for both metals.

​This decision is tied directly to the "Tech-First Roadmap" depicted in our previous news infographic (Image 4). By keeping gold and silver duties steady, the government is discouraging "non-essential" imports and instead diverting capital into the ₹12.2 lakh crore capex plan for high-speed rail, semiconductor missions, and cloud data centers. This signals a strategic move to transition Indian household wealth from "idle" physical gold into "productive" digital assets.[7, 13]

​Technical Analysis: The "Burj Khalifa" Pattern and Silver's Crash

​Technically, the rally was "stretched to the limit." Netizens and analysts likened the price charts to the "Burj Khalifa," indicating a parabolic rise that was unsustainable. By late January, gold's Relative Strength Index (RSI) had spiked above 90, while silver's RSI was near 84. In technical analysis, any reading above 70 is considered "overbought."

​Silver, which is historically more volatile, saw the most dramatic decline. It plunged from a peak of ₹4,20,048 per kg to hit its lower circuit at ₹2,65,652 per kg—a staggering drop of approximately 36% in just 48 hours.[1, 2]

​Bullion Statistics (Budget Day: Feb 1, 2026)

• ​Gold (MCX April Futures): ₹1,38,634 per 10 grams (Down from ₹1,93,096).[1]
• ​Silver (MCX March Futures): ₹2,65,652 per kg (Down from ₹4,20,048).[1]
• ​Total Market Cap Erosion: $5 Trillion (Gold: $3.5T; Silver: $1.5T).[1]
• ​New SGB Tax Rule: 12.5% LTCG for secondary market buyers (Effective April 1).
• ​Import Duty: Remains unchanged at 6%.

​Final Thoughts: Navigating the New Economic Reality

​Despite the current "blood on the streets," some analysts remain bullish for the long term. Institutions like Goldman Sachs have raised their 2026 gold price target to $5,400 per ounce, citing continued central bank diversification away from the dollar.[18, 19, 20]

​However, for the average investor at TMLabs India, the message from Budget 2026 is clear: the government is building an economy based on technology and infrastructure, not bullion hoarding. As volatility becomes the "new normal," the future of wealth in India is increasingly shifting from the locker to the digital portfolio.

​Are you buying this 20-36% dip in gold and silver, or are you shifting your capital toward the booming Indian software and semiconductor sectors? Let us know in the comments below!