A stronger US dollar, global profit booking, and the prolonged US government shutdown have contributed to the correction.
BY PC Bureau
October 28, 2025: After a sharp rally that pushed gold to record highs earlier this month, the yellow metal is now taking a pause. On the Multi Commodity Exchange (MCX), gold December futures are hovering around ₹1.21 lakh per 10 grams, while silver has dropped to ₹1.43 lakh per kg, marking a steep fall over the past week.
Analysts say the pullback was both expected and necessary after gold surged from nearly ₹75,000 to over ₹1.30 lakh in just a few months. A 10–15% correction was on the cards, likely bringing prices closer to ₹1.15 lakh per 10 grams.
“After gold prices surged sharply from around ₹75,000 to over ₹1.30 lakh, a correction in the market was both expected and necessary,” said Mahendra Luniya, Chairman of Vighnaharta Gold Ltd. “Ideally, this correction should be in the range of 10–15%, meaning prices could ease by about ₹13,000 to ₹19,500, taking them closer to ₹1.15 lakh per 10 grams.”
Despite the pullback, domestic demand remains steady. Jewellers report consistent footfall through Dussehra and expect renewed buying if prices soften further before Diwali and the wedding season.
Luniya added that investor sentiment toward gold remains resilient: “When prices crossed ₹1 lakh, people realised the worth of investing in gold. Whether through jewellery, coins or digital platforms, demand has held strong. If prices dip slightly from here, gold buying in India will likely accelerate further.”
Globally, sentiment has shifted amid the ongoing US government shutdown, now extending beyond 27 days, and uncertainty surrounding Donald Trump’s political influence, both of which have weighed on investor confidence.
“These developments are likely to pressure the US Federal Reserve to cut interest rates,” said Luniya. “If that happens, gold demand could rise once again. Given these dynamics, I don’t expect Indian gold prices to fall below ₹1.15 lakh per 10 grams.”
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At the same time, a stronger US dollar and profit booking after the record rally have contributed to the decline. Analysts note that the drop — more than 6% in a single day last week — was the steepest in over a decade.
“A stronger US dollar, declining physical demand in Asia, and profit booking at recent highs all contributed to gold prices closing lower for the first time in ten weeks,” said Dr. Renisha Chainani, Head of Research at Augmont. “The reversal reflects months of speculative positioning tied to concerns about fiscal weakness and expectations of rate cuts by the Fed. Despite the fall, gold’s long-term outlook remains positive.”
Silver, too, has mirrored gold’s trajectory, though with sharper declines. Prices corrected by about 9% as traders booked profits after recent highs. Higher US bond yields and easing supply concerns also weighed on sentiment.
“Silver’s correction was sharper because profit-taking increased after its big rise earlier this month,” Chainani added. “But its long-term fundamentals remain strong, supported by industrial demand from the electric vehicle and solar sectors.”
Technically, gold is expected to consolidate between ₹1.20 lakh and ₹1.24 lakh per 10 grams in the near term. A breakout on either side could move prices another 3–4%. For silver, ₹1.44 lakh per kg remains strong support, while ₹1.50 lakh is the key resistance level.
For retail buyers, this correction could be an opportunity. With the wedding season approaching, even a modest dip may be enough to draw shoppers and investors back to the counter.
