Why Are Gold and Silver Prices Decreasing After Record Highs?
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Synopsis
As gold and silver prices retreat from their record highs, jewellery sales have surged by 35–40% during Dhanteras, showcasing a vibrant festive demand. This article explores the dynamics behind fluctuating metal prices and rising consumer interest in jewellery, providing insights into the market trends and predictions for upcoming sales.
Key Takeaways
- Gold and silver prices have recently declined.
- Jewellery sales increased significantly during Dhanteras.
- Silver ETFs recorded sharp corrections.
- Market demand remains strong despite price fluctuations.
- Future sales projections indicate robust growth.
Mumbai, Oct 21 (NationPress) The prices of gold and silver decreased on Tuesday as investors realized profits following the metals reaching unprecedented highs in the previous session. This drop occurred despite a significant surge in festive jewellery sales during Dhanteras, which rose by 35–40 percent throughout India.
Silver Exchange Traded Funds (ETFs), which had achieved impressive one-year returns of approximately 65–70 percent, experienced a notable correction as global prices softened due to an enhanced supply and reduced safe-haven demand.
Silver had gained traction earlier this month when global spot prices skyrocketed past $40 an ounce due to worries over a physical shortage. The price rally continued, surpassing $50 in mid-October.
However, by the end of last week, prices began to decline as easing trade tensions diminished safe-haven demand. On October 17, US silver prices plummeted by over 6 percent, and this correction soon affected Indian markets.
As reported by the India Bullion and Jewellers Association (IBJA), silver prices in India dropped by 7 percent on October 20, falling from Rs 1,71,275 per kg to Rs 1,60,100 per kg. This decline directly influenced silver ETFs, which reflect domestic silver prices.
Data from Ace MF indicates that silver ETFs suffered substantial single-day losses, with most funds declining by up to 7 percent on October 20.
Experts observed that the ETFs are now trading at or below fair value, indicating a reduction in investor demand after months of significant inflows.
In the international market, gold prices also softened after reaching record highs on Monday. As of 0248 GMT, spot gold was down 0.3 percent at $4,340.29 per ounce, following an all-time high of $4,381.21 in the earlier session.
US gold futures for December delivery decreased by 0.1 percent to $4,356.40 per ounce, as investors took profits amid expectations of further interest rate cuts by the US Federal Reserve.
The Multi Commodity Exchange (MCX) is set to conduct special Muhurat trading today, October 21, featuring a pre-open session from 1:30 p.m. to 1:44 p.m., followed by the Muhurat trading window from 1:45 p.m. to 2:45 p.m.
Despite the temporary correction, festive demand for gold and silver remains robust. The All India Gem & Jewellery Promotion Council reported that approximately 50 to 60 tonnes of jewellery were sold nationwide over the two days of Dhanteras, generating nearly Rs 85 crore in sales.
While the sales volume was comparable to the previous year, the overall value increased by 35–40 percent due to higher prices and growing consumer interest.
“Silver, in particular, has experienced a remarkable rise, with sales nearly doubling this season. With Dhanteras coinciding with the weekend and followed by Diwali and Bhau Beej, this five-day festive period is anticipated to yield exceptional results,” it stated.
“We project total jewellery sales to reach between 100 to 120 tonnes, valued at approximately Rs 1 lakh crore to Rs 1.35 lakh crore,” they added.
Point of View
It's essential to highlight that despite the recent price corrections in gold and silver, the robust growth in jewellery sales during Dhanteras indicates a resilient consumer interest. This trend reflects the enduring cultural significance of precious metals in Indian celebrations, suggesting a promising outlook despite market fluctuations.
NationPress
21/10/2025
Frequently Asked Questions
Why did gold and silver prices fall recently?
Gold and silver prices fell as investors took profits after reaching record highs, coupled with easing trade tensions that reduced safe-haven demand.
What was the increase in jewellery sales during Dhanteras?
Jewellery sales during Dhanteras surged by 35–40% across India, amounting to approximately 50 to 60 tonnes sold.
How did silver ETFs perform in the recent market?
Silver ETFs experienced significant declines, with some funds dropping by up to 7% on October 20, as prices corrected following a period of heavy inflows.
What are the forecasts for future jewellery sales?
Total jewellery sales during the festive season are projected to reach between 100 to 120 tonnes, valued at approximately Rs 1 lakh crore to Rs 1.35 lakh crore.
What impact do interest rate cuts have on gold prices?
Expectations of further interest rate cuts by the US Federal Reserve often lead to decreased gold prices, as investors adjust their portfolios.
