Following an incredible rally that saw gold prices rise between 55 and 57 percent this year, the price of gold saw its largest decline in over 12 years in October 2025, plunging as much as 6.3% intraday to close to $4,000 an ounce. Platinum and silver also fell precipitously.
After months of gains propelled by profit-taking, a stronger US dollar, easing geopolitical tensions, and optimism surrounding US-China trade talks, this sharp decline represents a technical correction. Safe-haven demand in the face of inflation concerns, central bank purchases, retail investor fervor, and Federal Reserve rate cut expectations had all contributed to the rally.
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Gold Prices in India
- On October 22, the price of 24-carat gold bullion is approximately ₹128,000 per 10 g in major Indian cities, such as Hyderabad, Bengaluru, Delhi, and Mumbai.
- For instance, 10 g of 24-carat gold in Delhi costs about ₹127,820.
- 24 K = ₹13,057/g, 22 K = ₹11,969/g, and 18 K = ₹9,793/g on a per-gram basis.
- In terms of commodities and futures, domestic futures (December delivery) were trading at about ₹128,000/10 g, down about 0.2%.
Recent Trend & Market Context
- Gold has experienced a correction following a robust rally earlier this year. For example, the article “Gold Price Crashes Ahead of Diwali” cites five factors that contributed to the decline.
- Profit-booking, decreased demand following the festival (Diwali), and international cues are blamed for the decline in domestic prices.
- Globally, spot gold briefly fell to about $4,017.29/oz (¬2.6%) before rising again. Yet, earlier in the year gold had surged—partly driven by expectations of policy easing (e.g., from the Federal Reserve) and geopolitical tensions.
- However, gold had risen earlier in the year, in part due to geopolitical tensions and expectations of policy easing (from the Federal Reserve, for example).
What’s Driving Gold Prices?
Here are the major factors influencing gold prices—especially relevant in India.
Global/Macro Drivers
- Expectations for monetary policy: The opportunity cost of holding non-yielding assets, such as gold, is decreased by lower interest rates.
- Movement of the US dollar: When the dollar declines, gold becomes more affordable for buyers who do not use the USD, which boosts demand.
- Geopolitical uncertainty: Trade tensions, wars, and sanctions increase gold’s appeal as a “safe haven.”
- Central-bank purchasing: Significant official purchases send out encouraging signals and cut down on supply.
Domestic/India-Specific Drivers
- Import duties, taxes, and local premiums: The value of the rupee and duties/taxes are important because India imports the majority of its gold.
- Cultural/festival demand: In India, jewelry sales are boosted by weddings and festivals.
- Interest rates and inflation: While higher real rates tend to reduce the appeal of non-yielding assets, high inflation promotes gold as an inflation hedge.
- Production and supply costs: Mining expenses and interruptions in supply can affect prices.
- High imports of gold increase India’s import bill and can exert pressure on the rupee, which in turn can affect the price of gold.
Why the Current Correction?
A few reasons for the recent dip:
- Some investors booked profits following robust gains, particularly during festivals when expectations are high.
- The demand for safe-haven metals declines when risk sentiment improves globally (trade optimism, for example).
- Gold loses appeal when the dollar gains strength or when less aggressive easing is anticipated.
- At the local level, premiums and markups may be high due to saturating festive demand, which would reduce the number of new customers.
Conclusion
Following weeks of robust gains propelled by festive demand and international unpredictability, gold prices in India on October 22, 2025, indicate a period of correction. Despite being marginally less expensive today, the yellow metal is still close to its peak, indicating that investors are still confident in its long-term worth.
For the time being, gold is still a wise and safe hedge against inflation and market volatility, but astute investors should balance it with a variety of assets rather than depending just on its brilliance.
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