The sharp decline in gold and silver prices ahead of Dhanteras has raised an important question for buyers and investors: is this the right time to buy, or could prices fall further? In October, gold futures on the Multi Commodity Exchange (MCX) declined by nearly 7%, while silver futures fell by approximately 20%.
Silver has fallen more than 50% from its peak. Let us understand whether buying gold or silver on Dhanteras this year, which falls on 6 November, makes sense or whether buyers should wait for prices to decline further.
What’s Happening?
After the decline in October, both metals saw some recovery on 2 November. December gold futures were trading between Rs 1,39,065 and Rs 1,39,179 per 10 grams, up 0.23%–0.42% from the previous close. On the same day, MCX silver futures rose by around 1.3%–2%, trading in the range of Rs 1,81,611–Rs 1,82,701 per kilogram. However, on 3 November at 11:50 am, silver prices fell again by nearly 3% to Rs 1,78,624 per kilogram, down Rs 5,155.
According to LiveMint, gold prices in dollar terms were nearly 28% below their January peak, while silver was approximately 50% lower. On a calendar-year basis, gold was down nearly 10% and silver 19%. Both metals had declined for two consecutive months after recording gains in August.
What Are the Reasons Behind the Decline in Prices?
Uncertainty around US interest rates, rising crude oil prices and pressure across global commodity markets have affected gold and silver prices. In October, the US Federal Reserve kept interest rates unchanged at 3.75%-4%, but two members voted in favour of a rate hike. This has raised concerns about a possible increase in rates in December. Higher interest rates can make gold less attractive as an investment.
Meanwhile, according to CNBC-TV18, Ajay Kedia pointed out that nearly 50% of silver demand comes from industrial use, while supply constraints support its fundamentals. He described the current decline as an opportunity to buy gradually and identified $50 as an important support level in the international market. He also believes silver could reach 90-100 by next Dhanteras, although volatility may continue.
Will It Be Right to Buy Gold or Silver This Dhanteras?
Buying gold and silver on Dhanteras is considered auspicious. In this context, the recent price decline could offer an opportunity to those planning to buy jewellery, coins or other precious metal products during the festival. However, buyers should avoid making a large purchase solely because of the occasion or a one-day fall in prices. Domestic gold and silver prices are influenced by international market movements, the rupee’s exchange rate against the dollar and interest rates.
According to NDTV, experts advise investors to buy in installments rather than invest a large lump sum at once. This approach can help manage the risk of market volatility. Those planning to buy jewellery or coins on Dhanteras should also consider their budget, requirements and purpose of purchase before making a decision.
What Does This Mean for Investors?
According to LiveMint, Gaurav Arora of SAHI identified Rs 1,38,250 per 10 grams for gold and Rs 1,78,800 per kilogram for silver as immediate support levels on the MCX. A fall below these levels could lead to further weakness. He advised investors to buy in 2–3 installments instead of making a lump-sum purchase around Dhanteras. He also suggested keeping the allocation to silver lower than that to gold.
According to LiveMint, Vandana Bharti of SMC Global Securities believes the current decline could offer long-term investors an opportunity to buy gradually. Citing past examples, she pointed out that gold, which was trading below $40 per ounce in 1970, reached nearly $850 by January 1980. After falling to around $700 during the 2008 financial crisis, it climbed to $1,917 in August 2011. In March 2020, it slipped to nearly $1,472 before recovering. Bharti estimates that domestic gold prices could reach Rs 1.65 lakh–Rs 1.80 lakh per 10 grams by 2027.
What’s Next?
According to LiveMint, Kaveri More believes the decline from January’s peak has offered some relief to buyers ahead of Dhanteras and the wedding season. However, it would be too early to assume that prices have bottomed out. She therefore advises investors to buy gradually over the coming weeks or months rather than make a lump-sum investment.
Gold could find support from central bank demand and global uncertainty, while silver may benefit from industrial demand. However, silver remains more volatile, so investors should be cautious about their allocation. Those buying jewellery should also check the BIS hallmark, making charges, wastage, GST and buyback terms before making a purchase.
Overall, Dhanteras could offer an opportunity for planned purchases, but buying in installments rather than trying to time the market bottom may be a more sensible approach.
Disclaimer: This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The companies mentioned are cited as examples within the context of market developments. Investors are advised to conduct their own due diligence and consult their financial advisor before making any investment decisions.
Investments in the securities market are subject to market risks. Read all related documents carefully before investing.
