Gold prices have witnessed extreme volatility this week — plunging by the steepest margin in 12 years before staging a modest recovery — as shifting global cues, a stronger US dollar and post-festive demand cooling in the domestic market weighed on the precious metal.
In India, gold prices dropped to around Rs122,320 per 10gm (grams), following weeks of strong buying during the festive season. Dealers attributed the fall largely to subdued physical demand after Dussehra and Navratri. Prices in major Indian cities on Thursday reflected marginal variation — Rs121,890 in Delhi, Rs122,100 in Mumbai, Rs122,200 in Bengaluru, Rs121,940 in Kolkata, and Rs122,450 in Chennai, according to data from the India Bullion Association (IBA).
The sharp correction followed a period of relentless gains that had driven gold to record highs for five consecutive sessions. Analysts said the fall was primarily technical, coming after an over-extended rally. Despite the pull-back, experts believe the longer-term uptrend remains intact, buoyed by strong structural demand and geopolitical risk factors.
Meanwhile, in the international market, after soaring to an all-time high of US$4,381.52 an ounce earlier this week, gold prices fell as much as 6.3% on Tuesday, marking bullion’s biggest single-day decline since 2013. The sell-off was triggered by a mix of global factors, including improved US-China trade sentiment, a firmer dollar and uncertainty surrounding the ongoing US government shutdown.
Global data showed that investor holdings in gold-backed exchange-traded funds (ETFs) had climbed to 98.9mn (million) troy ounces, the highest level in over three years, indicating that institutional appetite for the yellow metal remains robust.
By Thursday, spot gold had begun to recover modestly, trading around US$4,115 an ounce, up 0.4% for the day. Gold futures rose 1.1% to US$4,111.50, according to Dow Jones Market Data. According to reports, safe-haven buying had resumed amid persistent economic and political uncertainty in the US.
The prolonged US government shutdown has rattled markets and prompted investors to hedge against risk. Additionally, growing concerns over trade tensions resurfaced after reports suggested that the White House is weighing new export restrictions on software and technology goods to China. A high-level meeting between US president Donald Trump and Chinese president Xi Jinping next week in South Korea is being closely watched for potential progress.
The gold market’s near-term direction now hinges on the US Federal Reserve’s next interest rate decision and the September consumer price index (CPI) data, due to be released on Friday. Market participants are currently pricing in a 97% probability of a 25bps (basis points) rate cut at the upcoming Fed meeting, according to the CME FedWatch Tool.
Lower interest rates generally boost gold’s appeal by reducing the opportunity cost of holding non-yielding assets. If CPI data indicates easing inflation, expectations for monetary easing will likely strengthen, offering further support to gold.
In India, while prices cooled off after the festival period, jewellers expect fresh retail demand to pick up in the run-up to Diwali, traditionally one of the strongest buying seasons for bullion.
The recent surge in gold prices — up nearly 60% year-to-date in 2025 — has also been driven by record central bank purchases, persistent concerns about inflation and global monetary easing trends. According to the World Gold Council, spot prices averaged around US$4,077/ounce on Friday, down over US$300 from the previous week’s peak but still significantly higher than last year’s average.
Silver mirrored gold’s volatility, slipping to Rs146,080/kg in India, while December futures traded slightly lower at Rs145,751 on the Multi-Commodity Exchange (MCX). In global trade, silver, platinum and palladium prices also showed mixed trends as investors re-assessed risk.
While short-term price swings are likely to continue, gold’s dual role as both a growth and defensive asset ensures that it remains one of 2025’s most resilient performers amid persistent global uncertainty.
