Gold & Silver Prices Drop After a Festive Run: What Lies Ahead?

The bullish trend in the prices of metals like gold and silver appears to have cooled off as India celebrates the Diwali festival. On the day of Dhanteras i.e. Friday, Gold of 99.9% purity peaked at an all-time high of ₹1,34,800 per 10 grams in Delhi, driven by strong festive demand and haven buying amid ongoing geopolitical uncertainties. However, in the very next session, prices tumbled by ₹2,400 to close at ₹1,32,400 per 10 grams, marking a 1.78% fall from the record.

A similar retreat of 3.95% was observed in the prices of Silver during the same time. On the Multi Commodity Exchange (MCX) in India, silver prices fell by ₹7,000 to ₹1,70,000 per kilogram, extending losses for the second straight day. Investors and festive buyers are left wondering if the slide is over, or will prices dip further?

The recent rally in gold and silver had painted a bright picture of soaring demand and global uncertainty driving prices to unprecedented levels. Yet, the retreat signals profit-booking, easing geopolitical fears, and rising bond yields are reshaping the outlook just as the festival spirit peaks.

What factors led to this speed-breaker in the pricing rally?

• Profit-Booking for Rally: In a year, i.e. from Diwali 2024, Gold Prices have risen by almost 62.65% while Silver has been up by 70.51% owing to which, Investors considered it as a perfect time to harvest the gains and book profits.

• Easing Geopolitical Tension: Recent remarks from the U.S. leaders that eased trade-war concerns and better-than-expected regional bank earnings in the U.S. have lifted risk appetite thereby reducing demand for non-yielding safe havens.

• Rising Bond Yields: We have witnessed some stabilisation in U.S. regional banks and expectations of delayed rate cuts by the Federal Reserve have pushed bond yields higher, weighing on precious metals.

• Festive Demand: Dhanteras is usually the day when the demand for jewellery purchases remains high. Accordingly, to jewellery showroom owners, the sales volumes matched last year however, the sales value jumped owing to high pricing. Demand for the same typically cools immediately after the festival peak.

Here is a snapshot of the pricing of Gold on Dhanteras across some cities in India:

Prices for 24 Karat Gold (Per 10 Grams)

Hindustan Times

Will Precious Metals Fall Further?

Although, both the precious metals have seemed to cool down after their blistering runs, outlook now depends on global risk sentiment and U.S. policy signals:

• Bullish Scenario: Any fresh escalation in geopolitical tensions, renewed safe-haven demand, or unexpected surprises from the Fed could reignite buying, pushing gold back toward ₹1,35,000/10 Grams and silver above ₹1,75,000/kg.

• Bearish Scenario: Strength in the U.S. dollar, rising real yields, or clear signs of economic stabilisation could trigger further profit-booking, potentially sending gold toward its next technical support at ₹1,30,000/10 Grams and silver toward ₹1,65,000/kg.

What does it mean for buyers?

For festive shoppers, dips can offer better entry points, but timing is crucial. Narrowing price swings mean the difference between a bargain and a missed chance. Long-term investors may view the correction as a healthy pause, while short-term speculators should consider stop-loss orders to manage risk.

What do the next few days for these metals look like?

On Diwali, gold and silver traders must balance the zeal of traditional buying with evolving global cues. As metal prices consolidate, the next few days of U.S. macro data and trade-war headlines will likely determine whether the festive shine fades further or rekindles before the festive season completes.

Sources:

1. Times of India
   
2. Hindustan Times
   
3. India Today
   
4. Economic Times
   
5. Hindustan Times