The high-octane rally in the Indian bullion market hit a wall today. On February 5, 2026, gold and silver prices in India snapped a two-day rebound, entering a state of high volatility. While investors were hoping for a steady climb following the India-US trade deal optimism, a surging US Dollar and renewed “hawkish” signals from the Federal Reserve have triggered a massive wave of profit-booking.
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The Sudden Crash: Why Gold and Silver Tumbled Today
On the Multi Commodity Exchange (MCX), the silver March contract was the biggest casualty, plunging by nearly 10% in a single session. This translates to a drop of approximately ₹26,850, bringing the white metal down to the ₹2,42,000 level. Gold wasn’t spared either; the April futures contract lost about 1.40%, falling back toward the ₹1,50,900 per 10 grams threshold.
The Dollar Factor: How US Policies Are Impacting Indian Bullion
The primary driver behind this “brutal selloff” is the strength of the US Dollar Index (DXY), which is currently hovering near a two-week high of 97.5. Several factors are fueling this greenback surge:
Hawkish Fed Signals: Fed Governor Lisa Cook recently suggested that further rate cuts might be off the table due to persistent inflation risks.
The “Warsh” Effect: President Trump’s nomination of Kevin Warsh—a known inflation hawk—as the next Fed Chair has convinced markets that interest rates will stay “higher for longer.”
Treasury Yields: Rising US bond yields make non-interest-bearing assets like gold less attractive to global investors.
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City-Wise Breakdown: 24K, 22K, and 18K Rates
Despite the futures crash, retail prices across India showed varied resilience based on local demand and taxes. Below are the current rates for 10 grams of gold as of midday, February 5:
| City | 24K Gold (10g) | 22K Gold (10g) | 18K Gold (10g) |
| Chennai | ₹1,56,220 | ₹1,43,200 | ₹1,22,500 |
| Mumbai | ₹1,54,420 | ₹1,41,550 | ₹1,15,820 |
| Delhi | ₹1,54,570 | ₹1,41,700 | ₹1,15,970 |
| Bangalore | ₹1,54,420 | ₹1,41,550 | ₹1,15,820 |
| Hyderabad | ₹1,54,420 | ₹1,41,550 | ₹1,15,820 |
Reality Check: The “Trade Deal” High is Wearing Off
The official narrative on February 3 was that the India-US trade deal (lowering tariffs to 18%) would bolster the rupee and stabilize markets. However, the market is quickly realizing that a stronger dollar often offsets any local currency gains. In fact, while the trade deal is a long-term structural win, the short-term reality is dictated by US monetary policy. The “rebound” seen on Tuesday and Wednesday was likely a technical correction that failed to find support above the $5,000 (international) gold mark.
The Loopholes: Why Physical Silver and Futures Are Diverging
One of the strangest trends in the current market is the two-tier pricing for silver. While MCX futures crashed by 10%, physical retail prices only saw a modest dip.
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The Margin Loophole: The CME Group (US) and MCX (India) recently raised margin requirements. This forces leveraged traders to sell their paper “futures” contracts quickly, leading to a crash in the digital price that doesn’t always reflect the physical scarcity of the metal.
The Premium Gap: In cities like Chennai, physical silver is still commanding a premium due to high jewellery demand for the upcoming wedding season, creating a price gap of nearly ₹40,000 between “paper” silver and “real” silver.
What This Means for You
If you are a retail buyer looking for jewellery, today’s dip of roughly ₹5,000 per 100 grams for 24K gold is a significant “bargain hunting” window. However, for investors, the high volatility suggests that the bottom might not be in just yet. Therefore, staggered buying (SIP style) is much safer than a lump-sum investment while the Fed’s leadership transition remains uncertain.
Next Steps
Monitor the US-Iran talks scheduled for Friday; any de-escalation could further reduce the “safe-haven” demand for gold. You should also watch the ₹1,50,000 support level on MCX gold; if it breaks, we could see a slide toward ₹1,45,000. Finally, keep an eye on the RBI’s Friday policy statement, as any commentary on the rupee’s defense will indirectly impact local bullion costs.
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