Market Brief: Precious Metals (February 1, 2026) **Executive Summary** The precious metals complex is currently navigating extreme volatility. After hitting historic all-time highs in late January 2026, both gold and silver have experienced a sharp corrective selloff driven by aggressive profit-taking and a rebounding U.S. dollar. Despite this short-term pullback, the structural "supercycle" drivers—central bank accumulation, industrial deficits, and geopolitical hedging—remain firmly intact. **Price Action & Volatility** * **Gold:** After peaking near **$5,600/oz** (international) and **₹1.8 lakh/10g** (MCX), prices have corrected to approximately **$5,200–$5,300/oz** and **₹1.6 lakh/10g**. * **Silver:** The volatility is more pronounced. Following a surge to record highs of **$121/oz** (approx. **₹4.2 lakh/kg**), prices crashed over 15% in a single session to trade near **$110–$115/oz** (**₹3.3–3.4 lakh/kg**). * **Key Trigger:** The sudden dip is attributed to technical overbought conditions and anxiety surrounding U.S. monetary policy appointments, rather than a shift in fundamental demand. **Regional Demand Divergence** * **China:** Physical premiums remain elevated despite record prices. Retail investment is surging as a hedge against currency devaluation, while export controls on silver have tightened global supply chains. * **India:** High prices have dampened traditional jewelry consumption. However, investment demand has pivoted strongly toward **Digital Gold and ETFs**, with investors awaiting clarity on import duty structures from the Union Budget (February 1). * **Western Markets:** Institutional flows are increasing. Western investors are chasing the rally for portfolio diversification, fearing persistent inflation and sovereign debt risks. **Fundamental Drivers 2026** * **Industrial Hard Floor:** Silver’s downside is protected by a sixth consecutive year of structural deficit. Demand from solar photovoltaics (PV) and the booming AI hardware sector continues to outpace mine supply. * **Central Bank Floor:** Official sector buying remains a critical support level. Central banks, particularly in emerging markets, are projected to acquire nearly **800 tonnes** of gold this year to diversify reserves away from fiat currencies. **Outlook** While immediate price action suggests a period of consolidation and high variance, the macro backdrop for 2026 remains bullish. Tight physical availability, particularly for silver, combined with sustained global appetite, suggests the upward trend will resume once speculative froth clears.