What’s causing the gold and silver prices to crash, and should investors be concerned?

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 ₹1,21,857 on October 23, 2025, a decrease of ₹8,376, or nearly 6.4%. 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 ₹1,45,558 on October 23, a sharp fall of ₹25,659, or about 15%.

In fact, prices of spot gold and silver saw record plunges in international markets on Thursday. Spot gold fell 6.1% to $4,092/ounce from $4,356/ounce, while spot silver fell 7.1% to $48.74/ounce from $52.49/ounce.

Vijay Kuppa, CEO, InCred Money, said, “Gold and silver prices have corrected sharply in international markets over the last couple of days — largely on profit-taking after the recent spike, a firmer US dollar, and easing US-China trade tensions that reduced safe-haven demand. Some exchanges around the world, including MCX, increased margin for trading in gold and silver, which may have also led to unwinding of leveraged positions.”

Echoing similar views, Colin Shah, MD, Kama Jewellery, said, "The recent crash in gold price after a record high right around Diwali is largely on the much-anticipated lines, given the significant rally the yellow metal has witnessed in recent times. This comes more as a price correction, and while there is a dip, it is temporary. While in the long run, gold is expected to continue soaring to new heights given the backdrop of global economic triggers."

While short-term volatility may persist, structural drivers remain intact. Central banks continue diversifying their reserves into gold as an alternative to buying the US Dollar, supporting its long-term appeal. Silver retains strategic value too, thanks to its dual role as a precious and industrial metal — crucial for EVs, solar panels, and electronics.

Investor takeaways

“Maintaining a small portfolio allocation to both gold and silver remains prudent,” says Kuppa. Gold offers stability and possible upside in such an uncertain geopolitical environment. An investor may have a higher allocation in Gold versus Silver because gold is more stable and less volatile.

“The investors perceive this as an opportunity and take the “buy the dip” approach to book their profits, using gold as a hedge against inflation. Consumers, on the other hand leverage this softening of prices to buy jewellery for occasions like weddings. This rate correction is a positive approach for both classes of buyers, and while internationally the trend may differ, Indian gold-buying thrives on such occasions,” said Shah

It’s important to note that gold and silver are traded globally, and prices can move even when Indian markets are shut — such as during Diwali holidays. “To act on sudden overseas price moves, investors can use digital gold and silver, which trade 24x7. In contrast, gold and silver ETFs or Mutual Funds can only be transacted during Indian market hours,” adds Shah.