Gold and Silver Prices Tumble Sharply in India: Here’s Why Rates Are Falling for the Second Straight Week

After hitting record highs during the festive season, gold and silver prices in India have witnessed a dramatic fall. According to the India Bullion and Jewellers Association (IBJA), gold has dropped by ₹10,000 per 10 grams and silver has plunged by ₹20,000 per kilogram in just 15 days.

Experts attribute this steep correction to three major global and domestic factors — the strengthening of the US dollar, easing geopolitical tensions, and the US Federal Reserve’s firm stance on interest rates.

Gold Prices Slide After Festive Peak

In the weeks leading up to Diwali, gold and silver prices soared to unprecedented levels, with 24-carat gold hitting an all-time high of ₹1,30,874 per 10 grams on October 17. However, by the last trading session, the yellow metal had fallen sharply to ₹1,20,815 — a massive ₹10,059 decline.

Silver followed a similar trend. It dropped from ₹1,69,230 per kilogram to ₹1,49,125 per kilogram, reflecting a sharp ₹20,105 fall over the same period.

Despite India entering the wedding season — traditionally a strong demand phase for precious metals — prices continue to weaken, leaving both investors and jewellers puzzled.

Experts Point to Three Key Reasons

Market analysts cite three primary reasons for the ongoing slump:

1. Strong US Dollar:
   The dollar index gained strength following comments from the US Federal Reserve. A stronger dollar makes gold costlier for foreign buyers, leading to reduced global demand.

2. Reduced Geopolitical Tensions:
   With the easing of the Russia-Ukraine conflict and positive dialogue between global leaders like Donald Trump and Xi Jinping, safe-haven demand for gold has softened.

3. Tight Monetary Policy by the Federal Reserve:
   The Fed’s hawkish stance on interest rates has boosted bond yields, making non-interest-bearing assets like gold less attractive to investors.

Profit Booking Adds to Pressure

After nine consecutive weeks of gains, traders began heavy profit booking, triggering further sell-offs. On the Multi Commodity Exchange (MCX), December gold futures tumbled by ₹2,219, hitting a low of ₹1,17,628 per 10 grams before a mild recovery to around ₹1,21,500.

Similarly, on the Comex exchange, December gold contracts slipped by $141.3 to close at $3,996.5 per ounce. The combination of rising US Treasury yields and a firm dollar index continues to exert downward pressure on precious metals.

Silver Shows Mild Recovery

While gold remains under selling pressure, silver has shown slight signs of recovery. On MCX, December silver futures rose by ₹817, while on Comex, the white metal stayed almost steady at $48.16 per ounce. Experts believe the correction in both metals is a healthy and natural adjustment after months of sustained rally.

Impact of Seasonal and Global Trends

Market observers say that the end of festive buying, combined with reduced geopolitical uncertainty, has naturally cooled off demand. The festive rush, which pushed prices to record levels in October, has now subsided. Moreover, with the wedding season demand yet to peak, traders expect volatility to continue for the next few weeks.

Despite the short-term correction, analysts remain optimistic about gold’s long-term outlook. Rising global debt, persistent inflation, and continued central bank gold purchases are expected to provide support to prices in the coming months.

Summary: What’s Next for Gold and Silver Investors?

The sharp fall in gold and silver prices offers a mixed outlook for buyers and investors:

• Short-term: Expect continued volatility as markets react to US interest rate policies and global currency movements.

• Medium-term: Prices may stabilize once the wedding season demand picks up in India.

• Long-term: Global inflation, fiscal imbalances, and de-dollarization trends could drive gold higher again.

So, while the recent crash may worry traders, it could also present an opportunity for long-term investors to accumulate gold and silver at lower levels.