Gold’s sharp correction just days before Dhanteras has presented buyers with a dilemma — is this the right time to buy the yellow metal, or could prices fall further? After touching a peak of around Rs
1.80 lakh per 10 grams in January, gold has corrected nearly 20%, with prices in the domestic market hovering around Rs 1.42 lakh per 10 grams in recent sessions. The pullback has revived buying interest ahead of Dhanteras on November 6, with jewellers reporting renewed consumer interest as lower prices make purchases more affordable.
The correction is also reviving wedding season purchases. Jewellers expect Dhanteras sales volumes to rise 10-12% year-on-year, as consumers who postponed purchases during the rally return to the market.
So, does the correction offer an opportunity for gold buyers? How much risk can they take, and should they buy jewellery for a festival or gold as an investment?
Why Has Gold Fallen Despite Geopolitical Uncertainty?
Gold is traditionally considered a safe haven asset, particularly during periods of geopolitical uncertainty. However, its recent price movement shows that this relationship is not automatic.
International gold prices have come under pressure as expectations of higher US interest rates have strengthened. When interest rates and bond yields rise, gold becomes less attractive because it does not generate interest income. A stronger US dollar can also weigh on the metal, making it more expensive for buyers using other currencies.
Inflation has added another complication. Higher crude oil prices, linked to the US-Iran conflict, have raised concerns about persistent price pressures. If inflation remains elevated, the Federal Reserve could maintain restrictive monetary policy or consider further rate increases.
That creates a difficult environment for gold. While geopolitical uncertainty can support demand for the metal, higher interest rates and a stronger dollar can pull prices in the opposite direction.
Gold’s correction has also raised questions about whether the rally earlier this year had become excessive. Prices had climbed sharply before January’s record, leaving the market vulnerable to profit-taking and changes in investor expectations.
The metal has not lost all its support, however. Central bank purchases, global exchange-traded fund flows and continuing geopolitical uncertainty remain important factors that could help prices recover.
“Markets have swung from expecting rate cuts to pricing rate hikes. The Iran war pushed crude above $100 a barrel and lifted US inflation to 3.6%, so traders see about a 75% chance of a Fed hike in December. With the US 10-year yield near 4.9%, gold, which pays no interest, has become costly to hold. On October 30, an AI and tech stock sell-off triggered margin calls, and gold fell 3.6% in a day to a one-year low. It is now more than a quarter below January’s record,” said Narender Agarwal, CEO & Founder, Wealth1.
Is The Gold Price Correction A Buying Opportunity?
The recent decline has made gold more affordable compared with its January peak, but that does not necessarily mean it has reached a bottom.
Gold prices in India were nearly 20% below their January record in late October, according to market data. Recovering that peak would require a substantial rise from current levels.
Some experts believe gold could remain supported over the next six to 12 months, citing geopolitical uncertainty, central bank demand and concerns about government debt. However, forecasts vary, and a sustained recovery will depend on how interest rates, inflation and the dollar evolve.
“For investors with a three-to-five-year horizon, this correction is a fair entry point. Domestic gold is more than 20% below its January peak, and the long-term case for holding it is intact, with central banks still buying and the rupee under pressure. Timing the exact bottom is hard, though. Prices fell about 7% in October alone, and the Fed’s December decision could swing them sharply again. I would buy in three or four instalments over the next few months and keep gold at 10 to 15% of the portfolio,” said Agarwal.
Investors also need to distinguish between a correction and a reversal. A fall from a record high may create an opportunity for long-term buyers, but prices can remain under pressure if the factors that triggered the decline persist.
Trying to identify the exact bottom is difficult. Investors who buy all their gold at once may face losses if prices fall further. A staggered approach, in which purchases are spread over time, can reduce the risk of entering the market at an unfavourable level.
The decision should also depend on the purpose of buying. Someone purchasing jewellery for a wedding or festival has a different financial objective from an investor seeking portfolio diversification.
Should You Buy Jewellery, Coins Or Gold ETFs On Dhanteras?
“The choice should depend on the purpose of the purchase. For personal use and weddings, jewellery makes sense, but buyers should account for making charges and resale deductions. Coins and bars may suit those seeking physical ownership with lower fabrication costs. For investment purposes, gold ETFs offer convenient exposure without storage and purity concerns. Given the current volatility, we prefer staggered investments rather than deploying the entire amount at one price. Gold should ideally form part of a diversified portfolio rather than a concentrated investment,” said Mangesh Narnaware, Associate Fund Manager, Badjate Wealth.
Jewellers are expecting stronger showroom footfalls and advance bookings for the wedding season. Colin Shah, Managing Director at Kama Jewelry, told CNBCTV18 that festive demand could remain strong, driven by the traditional preference for buying jewellery during auspicious occasions. He estimates wedding season average purchase values at Rs 1.5 lakh-Rs lakh and expects sales to spike by 15-20% during the peak period.
Yash Kataria, CEO of Kataria Jewellers, also expects jewellery demand to hold up, even as consumers become more mindful of weight and value. Lightweight earrings, bracelets and delicate necklaces, along with designs that blend traditional motifs with contemporary styling, are likely to attract buyers.
At CaratLane, CMO Shaifali Gautam expects the festive season to draw buyers across categories, from those purchasing diamond jewellery for the first time to customers seeking high-value solitaires.
Gold coins and bars offer another option for buyers who want physical gold without purchasing ornaments. However, buyers need to consider premiums, storage, purity and resale conditions.
Gold ETFs provide exposure to gold prices without requiring physical storage. “For investment, gold ETFs work best, with no making charges or storage worries, and you can exit on any trading day. Since SEBI-directed curbs have paused fresh investments in gold fund-of-funds, buy ETFs directly on the exchange through a demat account,” said Agarwal.
Is India’s Gold Demand Under Pressure?
India’s gold demand is expected to fall to around 650 tonnes in 2026, its lowest level since 2020, according to the World Gold Council. Demand dropped 29% year-on-year to 162.5 tonnes in the September quarter. Jewellery purchases fell 20%, while investment demand declined 40%.
High prices have weakened affordability, while rising living costs and a poor monsoon have added pressure on household budgets. More than half of India’s gold demand comes from rural areas, where jewellery is also a traditional store of wealth.
The December quarter could see a recovery as Diwali and the wedding season encourage purchases. However, elevated prices and weakness in rural incomes may limit the rebound.
“Wedding demand will help, mostly at the margin. Muhurats begin on November 20, and the World Gold Council expects buying to pick up this quarter after a 29% year-on-year drop in July-September. Still, India’s 2026 demand is heading for a six-year low of about 650 tonnes, and the global price is set by US rates and the dollar. A real recovery needs the Fed to hold off on a December hike, or a deal to end the Iran war that cools oil. Until then, I expect a range-bound market,” said Agarwal.
What Should Buyers Watch Before Dhanteras?
Gold’s next move will depend on several factors, including US interest-rate expectations, inflation, the dollar, crude oil prices and geopolitical developments.
For jewellery buyers, the immediate priority is affordability and the purpose of the purchase. A festival or wedding purchase should not automatically become a bet on short-term price movements.
“Buyers should first distinguish between consumption and investment purchases. Those purchasing jewellery should check BIS hallmarking, HUID, purity, making charges and buyback terms. For investors, MCX gold support around Rs 1,30,000-Rs 1,32,500 per 10 grams and resistance around Rs 1,45,000-Rs 1,50,000 are important reference levels. Internationally, $3,500-$3,550 is a deeper downside reference zone, while $5,100 represents our longer-term upside scenario. Avoid investing the entire amount at once; staggered buying can help manage price volatility,” said Narnaware.
Gold may recover if interest-rate pressures ease and uncertainty supports demand. But a stronger dollar, persistent inflation or higher US yields could prolong the correction.
