How did gold lose its sparkle while silver slumped over 7% after Diwali?

Gold prices in Ahmedabad declined sharply after Diwali, with the spot rate on the Multi Commodity Exchange (MCX) dropping from ₹1,30,233 per 10 grams on October 17 to ₹1,26,655, a decrease of ₹3,578, or nearly 3%. Additionally, silver prices in Ahmedabad fell significantly during Diwali, with the spot rate on the MCX dropping from ₹1,71,217 per kg on October 17 to ₹1,58,644 on October 21, a sharp fall of ₹12,573, or about 7.3%.

The festive week, which usually sees strong buying interest, instead witnessed a drop in bullion prices, reflecting weaker global cues, cautious demand among investors and increased gold reserves by central banks. Similarly, for silver, the drop came, suggesting profit booking, and soft global trends weighed on the precious metal.

In fact, prices of spot gold and silver saw record plunges in international markets on Tuesday, a day after Diwali. Spot gold fell 4.8% to $4,149/ounce from $4,356/ounce, while spot silver fell 6.7% to $49/ounce from $52.49/ounce.

Gold in the Reserve Bank of India’s (RBI) foreign exchange reserves has exceeded $100 billion for the first time, reaching $102 billion in the week ending October 10. RBI data shows gold holdings increased by $3.6 billion that week, despite a $2 billion decline in total foreign exchange reserves, which now stand at $697.7 billion.

Gold now makes up 14.7% of India’s total reserves, the highest level since 1996–97. This increase results from valuation gains due to rising prices and consistent accumulation over the last decade. During this period, gold’s share in India’s reserves has nearly doubled, rising from about 7% to nearly 15%.

The initial rise in gold prices was driven by concerns over U.S.-China relations. However, the reversal in gold and silver prices is partly due to increased margin requirements on the Shanghai Exchange last week, which triggered a sell-off that spread globally, according to experts.

So, if the current drop in market volatility for gold and silver feels too alarming, it is a good moment to honestly assess your exposure to precious metals.