Gold prices on the Multi Commodity Exchange crashed sharply on Budget Day, with MCX Gold futures plunging nearly 9% and hitting the lower circuit, wiping out more than Rs 13,000 per 10 grams within minutes of trade.
The sharp fall in gold comes as markets witnessed aggressive profit booking after a relentless rally over the past few weeks. Gold had surged to record highs driven by heavy speculative positioning, safe-haven demand, and expectations of rapid U.S. interest rate cuts. Once prices started correcting, forced liquidation and stop-loss triggers accelerated the decline.
Sentiment turned decisively negative after the U.S. dollar strengthened on expectations that the new Federal Reserve leadership would adopt a more measured approach to rate cuts. A stronger dollar makes dollar-priced commodities like gold more expensive for global buyers, leading to reduced demand and algorithmic selling by funds.
The selloff in gold was further amplified by a broader crash across metals, with silver, copper, aluminium and zinc also hitting lower circuits. Silver’s outsized fall triggered margin calls, forcing traders to liquidate gold positions as well to meet collateral requirements.
Thin liquidity during the special Sunday Budget session added to volatility, allowing prices to gap sharply lower with limited buying support. The move appears entirely macro- and sentiment-driven, with no India-specific policy announcement triggering the fall.
Overall, gold’s 9% lower circuit reflects a perfect storm of overcrowded positioning, dollar strength, fading rate-cut hopes, and forced selling, marking one of the sharpest single-session declines in recent years.
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