Gold price crashes over ₹38,600 from record high — What'll happen amid Diwali 2026 fervour? Right time to buy? Decoded
Gold prices on the Multi Commodity Exchange (MCX) have plunged more than ₹38,600 from their record high of ₹1,80,779 per 10 grams, recorded on 29 January 2026. Gold futures settled at ₹1,42,024 on Friday, down 21.43% from the peak. The yellow metal has also declined 4.7% so far in October, reflecting mounting pressure on precious metals.
Commodity markets witnessed sharp volatility during the week as escalating tensions in the Middle East, rising crude oil prices and persistent US inflation concerns weighed on investor sentiment, according to market experts. Higher energy prices reinforced expectations that monetary policy could remain restrictive for longer, putting pressure on gold and silver.
Internationally, gold fell around 4% during the week, marking its steepest weekly decline since June, and slipped below the psychologically significant $4,000-per-ounce level for the first time since mid-July. Silver prices also weakened, trading near $54 per ounce on Friday.
According to commodity experts, the sell-off was compounded by weakness in US technology stocks, particularly AI-linked companies, which triggered margin calls and forced investors to liquidate precious-metal holdings to meet their obligations. This added to the selling pressure across gold and silver.
However, the correction has also created buying opportunities in some physical markets. In India, lower prices encouraged physical gold purchases during the Dussehra festival, offering some support to demand. Chinese jewellery demand, meanwhile, remained subdued, according to market experts.
Overall, gold prices remain caught between support from physical buying and pressure from elevated crude oil prices, inflation concerns and expectations of higher-for-longer interest rates.
Ponmudi R, CEO of Enrich Money, said gold prices have corrected by nearly ₹38,600 from their record high of ₹1,80,779 on the MCX, bringing the metal back to a crucial support zone around ₹1,40,000. Repeated failures to sustain higher levels indicate that selling pressure remains strong. However, the correction could offer an opportunity for gradual accumulation rather than aggressive buying.
Ponmudi noted that Diwali and the wedding season have historically supported physical gold demand in India, but festive buying alone may not be enough to reverse the broader market trend. International gold prices, US interest-rate expectations, dollar strength and geopolitical developments will remain key drivers. A weaker Indian rupee could also cushion domestic prices even if global gold prices remain under pressure.
From a technical perspective, he identified ₹1,40,000 as a crucial level to watch. A sustained hold above this support could trigger a recovery towards ₹1,48,000– ₹1,52,000 ahead of Diwali. However, a decisive break below ₹1,40,000 could extend the correction towards ₹1,38,000– ₹1,36,000.
Ponmudi said festive demand could support a recovery, but would not independently establish a sustained bullish trend. He added that a more favourable buying opportunity would emerge when price stability aligns with improving global market conditions, advising investors to wait for confirmation rather than attempt to predict the market bottom.
Meanwhile, Aamir Makda, Commodity and Currency Analyst, Commodity Technical Research at Choice Broking, said gold has entered a sharp corrective phase following its record-breaking rally, driven by profit-booking, a stronger US dollar, easing geopolitical tensions and elevated bond yields.
Heading into Diwali 2026, Makda expects gold to remain in a consolidation phase or maintain a mildly bearish bias as investors assess central bank policy trajectories and elevated domestic prices weigh on immediate consumer demand. Sustained real yields, institutional portfolio rebalancing and the possibility of slower interest-rate cuts by global central banks could continue to constrain prices.
However, he noted that gold's long-term investment case remains supported by structural factors, including continued central bank purchases and its role as a hedge against inflation.
For prospective buyers, Makda believes the significant price correction offers an opportunity to build exposure gradually ahead of the festive season. Rather than attempting to time the exact market bottom, he recommended staggered accumulation during periods of weakness as a more measured approach to investing in gold.
Dhanya Nagasundaram works as a Content Producer at LiveMint, specializing in news related to financial markets, stocks, and business. With over eight years of experience in journalism and content creation, she has honed her skills in data-driven reporting and market analysis. Her focus is on monitoring stock trends, initial public offerings (IPOs), corporate news, policy shifts, and larger economic trends that affect investors and market players. <br><br> At LiveMint, Dhanya consistently writes and produces articles that make complex financial topics accessible to readers. She keeps a close eye on equity markets, commodities, and macroeconomic indicators, assisting audiences in comprehending how global and domestic events influence investment perspectives. Her stories frequently underscore emerging trends within sectors, the IPO market, company earnings results, and market strategies pertinent to both retail and institutional investors. <br><br> Before her tenure at LiveMint, Dhanya accumulated a wealth of professional experience at various companies, including MintGenie, Informist, Cogenics, Chary Publications, KPMG, and the Royal Bank of Scotland. These positions allowed her to establish a solid foundation in financial research, reporting, and content creation. <br><br> Throughout her career, she has explored numerous subjects such as trading strategies, commodities, IPOs, wealth generation, corporate profits, and macroeconomic indicators. Her background in both financial journalism and corporate settings has given her the ability to tackle stories with analytical rigor while ensuring clarity for her audience. Through her contributions, Dhanya strives to deliver insightful, trustworthy, and investor-centric financial content.
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