Gold dips 25% from January 2026 peak: Is it time to buy ahead of Dhanteras?

With gold prices retreating from their January highs, investors and households are approaching this year's Dhanteras season with a familiar question: is the correction an opportunity to buy, or could prices fall further?

The pullback has brought some relief to buyers after a sharp rally in precious metals. However, market participants remain divided on the near-term trajectory of gold, with global financial indicators pointing to possible further volatility even as central bank purchases, geopolitical uncertainty and festive demand provide support.

According to NS Ramaswamy, Head of Commodity at Ventura, international spot gold corrected by more than 5 per cent in October to around $3,970 an ounce, while domestic bullion prices fell to approximately Rs 1,41,500 per 10 grams. He described the move as a sharp technical correction, with prices down around 25 per cent in rupee terms from their January 2026 highs of more than Rs 1.80 lakh per 10 grams.

The correction has coincided with changing expectations around US monetary policy. Expectations of higher interest rates, persistent inflation concerns, rising US bond yields and a stronger dollar have increased the opportunity cost of holding gold, which does not generate income.

Despite geopolitical tensions, gold has struggled to retain some of its traditional safe-haven appeal in the face of these financial pressures.

Ramaswamy expects gold to trade in a range of $3,900-$4,200 an ounce internationally and Rs 1,40,000-Rs 1,50,000 per 10 grams in India during November.

" Festive and Wedding volumes are likely to rise as families would capitalize on the price drop.  Gold prices are predicted to range $3900 - $4200 / Rs.140000 – Rs.150000 for November 2026. Prices will likely consolidate in early November before finding a firm bottom as physical wedding purchases will absorb institutional selling, if any. India’s secondary domestic supply has improved due to the old-gold exchange surge which has kept a lid on local spot premiums. Gold is likely to test $3900 ahead of the December Fed meeting and in rupee terms support with buying could  be in the range of Rs.141000 to Rs.145000 with strong resistance at Rs.152000 Globally, prices are expected to remain volatile ahead of the crucial December Federal Reserve policy meeting," Ramaswamy told Business Standard.

The price correction comes at a time when India's physical gold market is showing signs of a sequential recovery.

According to the World Gold Council's Gold Demand Trends: India Focus report for the third quarter of 2026, Indian gold demand rose 24 per cent quarter-on-quarter to 162 tonnes. However, it remained 29 per cent lower year-on-year and 12 per cent lower during the first nine months of the year.

The value of gold demand has held up better than volumes. In the July-September quarter, demand value rose 3 per cent year-on-year to Rs 2.42 trillion, even as the quantity purchased declined. During the first nine months of 2026, demand fell 12 per cent to 444 tonnes, while its value increased 38 per cent to Rs 6.69 trillion.

This divergence reflects the impact of elevated prices on household purchasing power: consumers are spending more but buying less gold.

Jewellery demand rose 33 per cent sequentially to 100 tonnes in the third quarter, supported by seasonal purchases and softer prices towards the end of the quarter. Yet it remained 20 per cent below the year-ago level. Bar and coin demand increased 9 per cent quarter-on-quarter to 55 tonnes, but declined 40 per cent year-on-year, partly reflecting a strong comparison base.

Investment demand through gold exchange-traded funds (ETFs) also strengthened, with inflows rising to 5.3 tonnes in the third quarter from 3.6 tonnes in the second quarter.

The World Gold Council expects seasonal buying to support overall demand in the fourth quarter, although jewellery volumes could remain constrained by high prices.

For investors, the argument for holding gold goes beyond the immediate festive season or the possibility of a near-term price recovery.

Sharwan Goyal, Executive Vice President and Head of Passive, Arbitrage and Quant Strategies and Fund Manager (Equity) at UTI Asset Management Company, said gold and silver should be viewed as part of a diversified asset allocation strategy rather than as trades driven by recent price movements.

Gold continues to benefit from central bank purchases, geopolitical tensions, exchange-traded fund inflows, movements in US real interest rates and the dollar. For Indian investors, rupee depreciation can provide an additional cushion to domestic gold prices.

A broader shift in global reserve management is also supporting the metal. Concerns around dependence on the US dollar, rising sovereign debt, economic sanctions and changing trade relationships have encouraged central banks to diversify their foreign exchange reserves by accumulating gold.

Goyal said investors should not approach precious metals simply by chasing recent returns. Instead, gold can help diversify portfolio risks and provide a store of value during periods of uncertainty.

Silver, meanwhile, has a somewhat different investment profile. Its demand is supported by industrial applications in solar energy, electric vehicles, electronics, semiconductors and artificial intelligence-related infrastructure. However, its greater sensitivity to industrial activity and economic cycles makes it more volatile than gold.

For investors looking to build exposure after the correction, experts suggest avoiding large lump-sum investments based on an attempt to identify the market bottom.

Goyal recommends staggered investments through gold and silver ETFs, allowing investors to spread purchases across different price levels rather than committing the entire amount at once.

"From an asset allocation standpoint, investors should look at precious metals as a deliberate, calibrated part of a diversified portfolio rather than solely based on recent price performance. Equities should remain the primary engine of long-term wealth creation through earnings growth and compounding, while fixed income can bring relative stability. Precious metals complete the picture by helping to diversify portfolio risks. With commodity prices swinging sharply, the smartest way to build the position is through staggered investments in Gold ETFs & Silver ETFs, which avoids committing a large amount at a single price point and let volatility work in the investors favour. The right allocation will depend on individual investment objectives, risk appetite, and investment horizon," said Goyal.

The distinction between physical gold and financial gold is also important. Jewellery purchases involve making charges and other costs, while ETFs provide exposure to gold prices without the need to store the metal. Investors should nevertheless consider expense ratios, tracking differences, liquidity and their investment horizon before selecting a scheme.

Nippon India ETF Gold BeES remained the largest scheme in the segment, with assets under management of Rs 56,982 crore, representing 30.6 per cent of the category, according to the data shared by the fund house. The scheme also commanded an estimated 49 per cent share of the category's one-year average daily trading volume and around 33 per cent of category assets under management.

Its silver counterpart, Nippon India Silver BeES, accounted for around 41 per cent of category assets under management and 61 per cent of one-year average daily trading volume, according to the figures provided.

The key question for investors is not whether gold will rise immediately after Dhanteras, but how much exposure it deserves in a long-term portfolio.

Goyal said equities should remain the primary engine of long-term wealth creation through earnings growth and compounding, while fixed income provides relative stability. Precious metals can complement these allocations by helping diversify portfolio risks.

The appropriate allocation depends on an investor's objectives, risk appetite and investment horizon. Gold and silver should therefore be treated as calibrated portfolio holdings rather than substitutes for equity or fixed-income investments.

Avinash Agarwal, Senior Vice President and Head of Equity at Bandhan Life, also sees the longer-term outlook for gold as positive, supported by central bank purchases and a gradual shift among investors towards gold as an alternative to the US dollar.

However, he cautioned that prices will remain sensitive to US bond yields, movements in the dollar and US fiscal policy. For Indian investors, currency movements will also influence domestic prices. If the US makes progress in addressing its fiscal deficit, gold could face near-term pressure; otherwise, its positive momentum could continue.

"Investors should avoid investing the entire amount at current levels and instead consider staggered buying on declines. Gold can continue to form part of a long-term portfolio as a hedge against uncertainty and for diversification," said Satish Dondapati, Fund Manager, Kotak Mahindra AMC. 

"Investors are advised to begin accumulating gold in a staggered, systematic manner at these lower valuations. We maintain a long-term bullish outlook with a price target of 165,000 to 180,000 levels by next Dhanteras," said Deveya Gaglani, Senior Research Analyst - Commodities, Axis Direct.

 Piyush Mehta, Smallcase manager, Caprize Investment Managers explains the near-term outlook and investor takeaway: Gold is likely to remain volatile, with $4,000 per ounce an important psychological level to watch. Further escalation in Middle East tensions could revive safe-haven demand, while a stronger dollar and hawkish Federal Reserve expectations may constrain gains. Longer term, central-bank purchases, geopolitical fragmentation and portfolio diversification should support gold’s investment appeal.

"For investors, the prudent approach is to view gold as a portfolio diversifier and long-term hedge, rather than a guaranteed short-term safe haven. Maintaining a measured allocation aligned with individual risk tolerance, investment horizon and overall portfolio exposure is preferable to making tactical decisions driven solely by geopolitical headlines," said Mehta.