Gold, silver tumble from record highs as festive glow fades amid weak global cues

Gold and silver lost their festive shine this week, tumbling from record highs and snapping a nine-week rally as a strong dollar, easing geopolitical tensions, and falling global prices triggered profit-booking by investors.

On the Multi Commodity Exchange (MCX), gold futures for December delivery plummeted by Rs 3,557 or 2.80 per cent, during the week to close at Rs 1,23,451 per 10 grams on Friday.

Silver futures also succumbed to profit-taking, with the December contract crashing by Rs 9,134, or 5.83 per cent, to settle at Rs 1,47,470 per kg. Both metals had been on a rise since the week ended on August 22.

Scaling fresh peaks, gold hit Rs 1,32,294 per 10 grams and silver touched a record Rs 1,70,415 per kg on October 17. Since then, the yellow metal has shed Rs 8,843, or 6.68 per cent, while silver dropped by Rs 22,945, or 13.46 per cent.

Gold takes a breather after nine-week sprint  

The precious metal took a breather this week after a strong nine-week rally as investors preferred to book profits following weak global trends. Waning festive demand post-Diwali also hit sentiment.

In the international markets, Comex gold touched a lifetime high of $4,398 per ounce on Monday. But, the metal plunged by $266.4, or 6.11 per cent, marking its biggest one-day drop in over a decade, to hit an intraday low of $4,093 per ounce on Tuesday.

Mahendra Patil, founder and managing partner, MP Financial Advisory Services LLP (MPFASL), said the market witnessed its steepest one-day fall in gold since 2013 on October 21, before stabilising toward the weekend.

“In India, physical gold demand softened post-Diwali after a strong festive rush, as consumers preferred to wait for further price corrections. Global gold exchange-traded funds (ETFs) also recorded net outflows in mid-October after a surge in inflows during September.

“The redemptions signalled short-term profit-taking, reducing institutional demand for bullion. The liquidation pressure amplified gold’s mid-October correction, contributing to a 5 per cent price drop,” Patil added.

In the domestic markets, the rupee’s mild appreciation helped cushion price declines.

NS Ramaswamy, Head of Commodities & CRM of Ventura, said while physical jewellery has slowed since Diwali, digital safe-haven demand remained strong. “We anticipate a revival in demand for the upcoming wedding season,” he said.

Silver tanks as speculative positions unwind

Silver, which outshone gold during the recent rally, faced a steeper correction as speculative positions unwound across global markets.

In the global markets, Comex silver futures hit a record of $53.76 per ounce. Thereafter, the white metal retreated to touch an intraday low of $49.66 per ounce, down by 7 per cent on October 17.

Further, it fell over 8 per cent, marking their steepest single-day drop since 2021, and touched a low of $47.12 per ounce on October 21.

“Silver futures from $53.76 per ounce in Comex and Rs 1,70,415 per kg on the MCX, saw a correction of 11-14 per cent from the record highs. Profit-taking and strengthening of US dollar while easing tensions in Eastern Europe and progress in US-China trade discussions, reduced the perceived risk in the global market,” NS Ramaswamy of Ventura, said.

According to Pankaj Singh, investment manager on smallcase and founder & principal researcher, SmartWealth.ai, the decline in silver prices marks a natural market adjustment after speculative demand and supply constraints had briefly inflated silver prices in prior weeks.

He described the pullback as consolidation, not capitulation. “The structural case for precious metals remains firm, driven by central bank purchases and inflation hedging demand. After a strong Diwali rally, the bubble that formed due to temporary silver supply shortages has now corrected,” Singh noted.