Gold prices can fall by ₹3,000 per 10 gm:Silver can become ₹6,000 per kg cheaper; govt may reduce tax on commodities

Buying gold and silver may become cheaper after the Budget 2026, which will be presented on February 1, 2026. The government may reduce the customs duty on these metals from 6% to 4%. If this happens, gold could become cheaper by about ₹3,000 per 10 grams and silver by ₹6,000 per kg. In 2025, gold increased by 75% and silver by 167%. Currently, in January 2026, 10 grams of 24-carat gold is available for ₹1,68,475 and one kilogram of silver for ₹3,57,163. 5 Reasons for the Increase in Gold and Silver Prices Wars and Uncertainty: Due to increasing tensions in the world (trade wars and geopolitical risks), investors considered gold a ‘safe asset’ to reduce risk. According to financial services firm JP Morgan, uncertainty has been the biggest driver of prices. Weak Dollar: The dollar weakened due to the reduction of interest rates by the US Federal Reserve. Since gold and silver are traded in dollars, their prices jumped as soon as the dollar fell. Central Banks’ Purchases: By December 2025, central banks around the world had a total of 32,140 tons of gold. According to the World Gold Council, central banks bought 1,082 tons of gold in 2022, 1,037 tons in 2023, and a record 1,180 tons in 2024. Central banks’ purchases are expected to exceed 1,000 tons in 2025 as well. Industrial Demand for Silver: More than 50% of silver is used in the manufacture of solar panels, EV batteries, and chips. Due to increasing demand, silver gave even higher returns than gold. Supply Shortage: The supply of gold and silver from mining remained limited, while demand increased. This supply shortage led to a jump in the prices of gold and silver.
Invest in Gold and Silver Now or After the Budget? According to financial experts, the right strategy is to avoid making large purchases all at once before the budget on February 1, 2026. Instead, one should adopt the method of investing in installments to reduce the risk of heavy price fluctuations. Naveen Mathur, Director of Commodities at Anand Rathi Shares and Stock Brokers, suggests that given the market uncertainty and high levels, investors should “buy on dips instead of chasing the rally.” It would be right to adopt a “buy-on-dips” strategy in small installments both before and after the budget. Navneet Damani, Head of Research (Commodities) at Motilal Oswal Financial Services, said that significant volatility can be seen in the first quarter of 2026, but the long-term trend is positive. Instead of trying to invest all the money at once, whenever there is a ‘decent dip’ in prices, use it as an opportunity to increase investment. 2 Ways to Invest in Gold and Silver Physical Gold-Silver: You can buy gold and silver coins or bars from trusted jewelers or banks. 24-carat gold is considered the best for investment. However, there is a fear of theft when keeping it at home. You have to pay a separate rent for keeping it in a bank locker. Gold-Silver ETFs: For this, you must have a Demat account. Just as you buy shares of companies, you can buy units of Gold or Silver ETFs from the stock market. There is no fear of theft here and 100% purity is guaranteed. Now, Answers to Two Important Questions… Question 1: Why might the government reduce the duty on gold and silver in the budget? Answer: The government may reduce the duty to curb gold smuggling. Currently, the total tax is 9%, including 6% import duty and 3% GST. People working in the grey market are earning a profit of about ₹11.5 lakh per kg of gold by saving this 9% tax. If the government further reduces the tax, the difference between international and domestic prices will decrease, and smuggling will reduce. In the July 2024 budget, the government reduced the import duty on gold from 15% to 6%. This increased demand by about 10%. Reducing the duty will reduce manufacturing costs and help Indian jewellery exporters compete in the global market. Silver is used extensively in EV and solar panel manufacturing. Reducing the duty will increase manufacturing, which will help in the green energy transition. Question 2: If the duty is reduced, what will be the impact on the industry? Answer: Kinjal Shah, Co-Group Head at Investment Information and Credit Rating Agency ICRA, said that even if the duty is reduced further, its impact will be for a short time only. This is because gold and silver prices are more influenced by international trends. In July 2024, the 9% duty cut led to a 5% drop in domestic prices. This increased jewellery sales by 10%, but the rise in international prices soon eliminated this relief. Jewellery sales also fell by about 10%. Now, an Interesting Fact Related to Gold: According to Morgan Stanley’s estimates, Indian families hold about 34,600 tons of gold, worth approximately $3.8 trillion. In rupees, this is close to ₹348 lakh crore. This is more than the total gold reserves of the central banks of the United States, Germany, Italy, France, Russia, and China combined. If we look at India’s population of 1.4 billion (140 crore), this amounts to approximately 25 grams per person.