Global bullion markets experienced significant corrections as gold prices declined and silver saw a drop of ₹27,000 per kilogram ahead of Diwali. Analysts attribute the sharp retracement to profit-booking, a stronger U.S. dollar, and rising geopolitical tensions in the Middle East.
Record-Breaking Declines Across Domestic and Global Bullion Markets
Precious metals experienced a severe downward correction following months of historic highs, catching investors off guard. In the domestic retail space, the benchmark 24-karat gold futures tumbled from an all-year peak recorded on January 29, when prices touched ₹1,76,306 per 10 grams, down to ₹1,42,778 per 10 grams by October 23.
International exchanges mirrored the domestic retreat.
Profit-Booking and Dollar Strength Driving Market Pressures
Market analysts point to a combination of technical profit-taking and macroeconomic shifts as the primary catalysts for the sell-off. According to India Bullion and Jewellers Association data, benchmark gold fell by ₹550 in a single session, representing a 0.37% dip from previous closing levels to hit ₹1,46,250 per 10 grams, while silver dropped by ₹2,220, marking a 1.05% decline to ₹2,09,730 per kilogram.
Augmont Chief Research Officer Rupsha Chainani noted that the drop represents the largest correction in the last 4 months, driven by surging crude oil prices, rising inflation, ongoing geopolitical friction in the Middle East, and a resurgent U.S. dollar index alongside higher bond yields. Concurrently, Brent crude touched 115 dollars per barrel and U.S. crude reached 100.76 dollars amid supply disruptions tied to reported attacks near the Hormuz route and escalating regional tensions involving Houthi actions against Saudi Arabia.
Retail Demand and Festive Expectations Ahead of Diwali
Despite the broader market volatility, retail jewelers anticipate a rebound in physical demand as consumers take advantage of lower entry points ahead of major autumn celebrations. HDFC Securities Senior Commodity Analyst Soumil Gandhi observed that spot demand has shown early signs of recovery as lower price thresholds encourage retail buyers.
Soumil Gandhi said that retail demand is expected to strengthen ahead of India's biggest festival, Diwali, which will support the local market.
Expert Outlook and Upcoming Federal Reserve Decisions
Commodity experts emphasize that the long-term bull run remains intact despite the steep short-term correction.
Traders are now turning their attention to the upcoming U.S. Federal Reserve policy meeting scheduled to begin on October 27, with results expected late on October 28. Analysts warn that if the U.S. bank increases interest rates for the second time, it could place further downward pressure on gold prices.
