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Buying gold and silver may become cheaper after the budget to be presented on February 1. The government can reduce the custom duty on it from 6% to 4%. If this happens, gold can become cheaper by about Rs 3 thousand per 10 grams and silver by Rs 6 thousand.
In 2025, gold has increased by 75% and silver by 167%. Currently i.e. in January 2026, 10 grams of 24 carat gold is available for Rs 1.50 lakh and one kg silver is available for Rs 3.50 lakh.
5 reasons for the rise of gold and silver
- Rust and uncertainty: Due to increasing tensions in the world (trade war and geo-political risks), investors considered gold as a ‘safe asset’ to reduce risks. According to financial services firm JP Morgan, uncertainty was the biggest driver of prices.
- Weak Dollar: The dollar weakened due to the US Federal Reserve reducing interest rates. Since gold and silver are traded in dollars, their prices jumped as soon as the dollar fell.
- Central Banks Purchasing: Central banks around the world now held a total of 32,140 tonnes of gold as of December 2025. According to the World Gold Council, central banks will buy 1,082 tonnes of gold in 2022, 1,037 tonnes in 2023 and a record 1,180 tonnes in 2024. Even in the year 2025, the purchase of Central Banks is expected to cross 1 thousand tonnes.
- Industrial demand for silver: More than 50% of silver is used in making solar panels, EV batteries and chips. Due to increase in demand, silver gave higher returns than gold.
- Shortage in supply: The supply of gold and silver from mining remained limited, while the demand increased. Due to this lack of supply, the prices of gold and silver have increased.
Invest in gold and silver now or after the budget
According to financial experts, the right strategy is to avoid making big purchases at once before the budget of 1 February 2026. Instead, the method of investing in installments should be adopted, so that the risk of huge fluctuations in prices can be reduced.
- Naveen Mathur, director of commodities at Anand Rathi Shares & Stock Brokers, suggests that given the market uncertainty and higher levels, investors should “buy the dip rather than chasing the uptrend”. It would be wise to adopt a strategy of “buy-on-dips” in small installments both before and after the Budget.
- Navneet Damani, Head of Research (Commodities) at Motilal Oswal Financial Services said – Huge fluctuations may be seen in the first quarter of 2026, but the long-term trend is positive. Instead of trying to invest money in one go, whenever prices take a ‘decent dip’, use it as an opportunity to increase investments.
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 from investment point of view. However, there is a fear of theft if it is kept in the house. If kept in a bank locker, separate rent has to be paid.
- Gold-Silver ETF: For this you must have a demat account. Just like 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% guarantee of purity.
Now answers to two important questions…
Question 1: Why can the government reduce the duty on gold and silver in the budget?
answer: The government can reduce the duty to stop smuggling of gold. At present, the total tax including 6% import duty and 3% GST comes to 9%. People working in the gray market are earning a profit of about Rs 11.5 lakh per kg of gold by saving this 9% tax.
- If the government reduces taxes further, the difference between international and domestic prices will reduce and smuggling will reduce.
- In the budget of July 2024, the government had reduced the import duty on gold from 15% to 6%. Due to this the demand increased by about 10%.
- Reduction in duty will reduce manufacturing costs and help Indian jewelery exporters compete in the global market.
- Silver is used extensively in EV and solar panel manufacturing. Reduction in duty will increase manufacturing, which will help in green energy transition.
Question 2: If the duty is reduced, what will be the impact on the industry?
answer:
- Ajay Kedia, director of Kedia Advisory, said that considering the budget as a big event, it is not right to make big investments in silver or gold right now. If you want to invest then a little investment every month will be appropriate. This will reduce the risk and increase the possibility of profit in the long term.
- Kinjal Shah, co-group head of investment information and credit rating agency ICRA, said – even if the duty is reduced further, its impact will be for a short period only. This is because gold and silver prices are more influenced by international trends.
- The 9% duty cut in July 2024 had led to a 5% decline in domestic prices. This increased jewelery sales by 10%, but the relief was soon wiped out by the rise in international prices. There was also a decline of about 10% in jewelery sales.
Now an interesting thing related to gold…
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Also read this news related to the budget…
Expectation from the budget: Announcement of 300 new trains possible: Earnings up to Rs 13 lakh can be tax free; 5 big announcements possible in the budget
This time in the budget, the government can make 5 big announcements for the middle class and rural India. There are speculations that the amount of Kisan Samman Nidhi may increase by ₹ 3,000. By increasing the standard deduction limit, income of Rs 13 lakh can become tax free for employed people. Read the full news…
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