Gold Prices Dip 7% After Festive Peak — Is This the Best Time to Buy?

Gold, often seen as a safe-haven investment during uncertain economic phases, has witnessed a notable correction after its sharp festive-season rally. Following record-high demand in October, prices have now slipped nearly 7%, prompting investors to ask whether this fall signals a fresh buying opportunity or a temporary pause.

Here’s a detailed breakdown of the recent price movement, expert analysis, global triggers and what it means for gold and silver investors.

Gold Drops Nearly 7% From Its All-Time High

Driven by festive spending, gold surged to an unprecedented ₹1,32,294 per 10 grams just a month ago. However, by 9 AM on November 17, prices on the MCX had slipped 6.88%, reaching ₹1,23,180 per 10 grams. Compared to the previous day, the decline was around 0.3%.

Experts say this is a healthy correction, not a crash.
Manav Modi of Motilal Oswal Financial Services notes that gold had already rallied 60–70% this year, making some profit booking inevitable.

What’s Driving the Volatility?

The recent dip has raised several key questions among investors:

• Is the US Federal Reserve’s rate-cut outlook changing?

• Why are central banks increasing their gold buying?

• Why is silver outperforming gold this year?

• And most importantly — is this the right time to invest?

Let’s break down the factors.

Long-Term Trend Still Favourable for Gold

Despite short-term corrections, gold’s long-term fundamentals remain strong due to a mix of global economic and geopolitical factors.

Several triggers continue to support gold prices:

• The US reopening after a 43-day government shutdown

• Expectations of liquidity support

• Strong gold buying by central banks

• Rising ETF inflows

• Persistent global uncertainty

Modi advises investors to book profits during sharp rallies and buy on dips, as long-term momentum remains positive.

Fed Rate Cut Impact

In October, the US Federal Reserve cut interest rates to 3.75–4%. While the market initially assumed political pressure influenced this move, Fed Chair Jerome Powell clarified that inflation risks remain elevated and economic clarity is still lacking.

Because the US job market has yet to show significant weakness, the Fed is unlikely to turn fully dovish soon. This has reduced the probability of another December rate cut from 90% to nearly 50%, adding to gold’s recent price swings.

In India, if the USD/INR stays around 90, gold is expected to find strong support between ₹1,18,000–₹1,20,000. If this range holds, experts foresee prices climbing back to ₹1,30,000–₹1,37,000 next year.

Why Central Banks Are Buying More Gold

According to the World Gold Council, central banks purchased 220 tonnes of gold in Q3 2025 — up 28% from the previous quarter.

India’s RBI alone increased its reserves to 880 tonnes by purchasing around 600 kg of gold between April and September 2025.

This trend highlights a key message:
In periods of global instability, gold remains the most trusted form of reserve security. Central bank buying provides strong long-term stability to gold prices, reducing the chances of a steep prolonged decline.

Why Silver Is Outperforming Gold

Silver has delivered stronger returns than gold this year, driven by its unique dual demand:

1. Safe-haven asset, similar to gold

2. Industrial metal, essential for fast-growing sectors

Silver demand has surged due to rising consumption in:

• Electric vehicles (EVs)

• Solar panels

• Battery technologies

• Clean-energy industries

While supply remains tight, industrial usage continues to rise — a combination that supports higher silver prices going forward.

Should You Invest in Gold or Silver ETFs Now?

In India, both gold and silver ETFs are witnessing unprecedented popularity:

• Gold ETF AUM: ~₹1 lakh crore

• Silver ETF AUM: ~₹35,000 crore

This indicates growing trust among investors in precious metals as long-term assets.

Experts believe ETFs are an excellent choice for investors with a one-year or longer horizon, thanks to:

• Transparency

• Liquidity

• Ease of investing

• Lower cost compared to physical gold

Maintaining a portion of your portfolio in gold or silver ETFs is considered a smart strategy in the current global environment.

Bottom Line

The recent drop in gold prices is widely viewed as a natural correction after an extraordinary rally. With central banks absorbing more gold, global uncertainty still high, and the possibility of rate cuts ahead, long-term prospects remain strong.

For disciplined investors, this dip could indeed be a favourable opportunity — provided the investment is gradual, planned and aligned with long-term goals.