A steep fall in precious metal prices set off a wave of selling across Indian metal stocks on February 1, with the Nifty Metal index plunging more than 5 percent in early trade to 11,218.80. The decline extended the weakness seen in the previous session as gold and silver futures continued their sharp correction for the third consecutive day.

The pressure on metal counters coincided with a dramatic fall in bullion prices on the Multi Commodity Exchange. Gold and silver futures opened nearly 6 percent lower, accelerating a three-session correction that has erased a large portion of recent gains made after hitting lifetime highs.

Gold futures for April delivery fell by ₹9,140 per 10 grams at the open to ₹1,43,205. In just three sessions, prices have dropped nearly ₹50,000 per 10 grams, representing a 26 percent fall from the recent peak of ₹1,93,096. Silver futures for March delivery mirrored the fall, dropping ₹17,515 per kg to ₹2,74,410. The metal has corrected by nearly ₹1,45,638 per kg, or 35 percent, from its record high of ₹4,20,048 within the same period.

The intensity of the correction suggests aggressive profit booking in precious metals after a parabolic rally, but it also signals a shift in global macro expectations.

A key trigger behind the selloff has been the strengthening of the US dollar and policy signals emerging from the United States. US President Donald Trump indicated that former Federal Reserve Governor Kevin Warsh, known for his hawkish stance on monetary policy, has been chosen to head the US central bank. The prospect of a tighter or slower rate-cut cycle in the US typically weighs on gold and silver, which thrive in low interest rate environments.

The knock-on effect of this global shift was immediately visible in Indian equities, particularly in metal stocks that are highly sensitive to global commodity prices and currency movements.

Among the hardest hit were counters with direct exposure to base metals and precious metal linkage. Hindustan Copper shares fell 19 percent to ₹555.10. National Aluminium Company (NALCO) declined 14.5 percent, while Hindustan Zinc dropped 13.5 percent. Vedanta and Hindalco Industries each fell around 10 percent. NMDC, Tata Steel, Steel Authority of India (SAIL), and Jindal Steel also saw declines of around 3 percent.

Gold ETFs were not spared either, falling as much as 16 percent in early trade, reflecting the sharp repricing in bullion.

The correction highlights how quickly sentiment can reverse in commodity-linked equities when global cues change. For months, metal stocks had benefited from the rally in commodities, expectations of rate cuts globally, and safe-haven flows into gold and silver. The current move unwinds part of that optimism.

From an Indian market perspective, this development is significant for two reasons.

First, metal stocks have a meaningful weight in sectoral indices and contribute to broader market sentiment. A sharp correction in this pocket can spill over into overall risk appetite, especially when the fall is triggered by global macro signals rather than company-specific developments.

Second, the decline underscores the sensitivity of Indian commodity-linked companies to US monetary expectations and currency strength. A stronger dollar typically pressures global commodity prices, which directly impacts realizations and margins for Indian producers.

The move also signals a shift from momentum-driven commodity trades to a more cautious stance as investors reassess global interest rate trajectories. The expectation of a more hawkish Federal Reserve leadership reduces the appeal of non-yielding assets like gold, while also tempering speculative flows into metals.

For domestic investors, the fall in gold ETFs and bullion prices could alter short-term allocation decisions, particularly for those who had moved into gold as a defensive asset amid global uncertainty.