Historically, Dhanteras and Diwali drive physical jewelry and coin demand. Festive season effect continues to support prices, but high price levels are limiting how much retail demand can increase.
1. Existing momentum: Gold is at record highs
Gold has been rising sharply in 2025 and recently reached new record levels after investors priced in more U.S. rate cuts and looked for safe haven during geopolitical and macro uncertainty. That international momentum is the key driver propelling local (Indian) prices higher into the festival season.
2. India-specific drivers: Rupee weakness + futures jump
In India, rupee depreciation and movement with global bullion have magnified profits: Indian gold and silver futures soared to all-time highs this week, driving domestic 24k/22k rates to new records. An importing rupee makes imported bullion more expensive, which directly feeds into retail prices in advance of Dhanteras/Diwali.
3. Festival demand vs. price agony, two contending forces
Historically, Dhanteras and Diwali drive physical jewelry and coin demand. But analysts caution that record-high prices are already taking a bite out of demand, Bloomberg reports jewellers anticipate weaker festive-season demand since pricey levels are causing consumers to delay or purchase lighter products. The festival effect continues to underpin prices, though higher price levels are limiting how much retail demand can increase.
4. What market analysts are saying
Even as some market strategists are still bullish on gold's medium-term prospects (referring to additional Fed easing as a pillar of support), others caution and suggest "sell-on-rise" as technical indicators point to overbought levels.
5. Supply-side & central-bank Behaviour matters
Central bank action and jewellery off-take also influence the context. World Gold Council / market commentaries observe that though some central bank purchases underpinned previous gains in 2024–25, RBI purchases have eased in 2025, one factor that can dampen structural support should demand ease. That easing softens a firm supply-side bid even as retail demand is matched by price sensitivity.
6. Critical risks that may arrest the rally before Dhanteras/Diwali
Be aware of three glaring reversal triggers:
(a) a sudden hawkish surprise or tardy Fed rate cuts that reinforces the dollar
(b) heavy profit-taking by funds following the 2025 rally; and
(c) an unexpected recovery in jewellery purchases that shifts sentiment.
Any of these can rapidly reverse momentum and result in a pullback in global as well as domestic prices.
