Buying gold and silver is a long-standing tradition for Indian families during festivals such as Dhanteras and Diwali. Some purchase jewelry, while others bring home gold and silver coins or bars. However, significant fluctuations in the prices of these metals recently have put buyers in a difficult position. Therefore, before purchasing gold or silver during this festive season, it is important to understand why their prices are changing, what factors might cause future increases, and what to consider when investing in these metals.
Gold and Silver Price Dynamics This Year
In January 2026, the price of gold on the international market reached approximately $5600 per ounce, and silver exceeded $100 per ounce. Following this, there was a sharp drop in the prices of both metals. When the price of gold fell below $4000, silver also experienced a significant decline, after which both prices recovered. The rupee exchange rate against the dollar has also influenced the cost of these metals in the Indian market.
Risks and Returns of Gold and Silver
The main difference between gold and silver lies in their volatility. Gold is generally considered a safe and stable asset. At the same time, the price of silver can rise faster than gold during growth periods, but it can also lead to more significant losses when falling. According to a report by Motilal Oswal Financial Services, gold represents a relatively stable option, whereas silver is a riskier investment instrument. Therefore, it is crucial to assess one's risk tolerance before investing.
Factors Affecting Gold and Silver Price Changes
The prices of both metals are influenced by the US dollar exchange rate, monetary policy, and interest rates set by the American central bank, crude oil prices, inflation, and global tensions. A strengthening dollar and rising interest rates in the US can put pressure on gold and silver prices. On the other hand, wars, economic uncertainty, and rising inflation prompt investors to turn to precious metals. Furthermore, the demand for silver depends on its industrial use. The need for silver in electronics, solar panels, and other industries affects its value.
Is it more profitable to buy gold before Diwali?
According to trends over the last 10 years, gold typically performed better in the 30 days leading up to Diwali than in the subsequent 30 days. For instance, in 2025, gold increased by approximately 20% in the month before Diwali. Nevertheless, in 2016 and 2021, gold prices also declined before Diwali. Consequently, this trend does not guarantee future price increases. One should also not make a decision to buy silver based solely on the festival date.
Why are global central banks buying gold?
Central banks worldwide are increasing gold purchases to diversify their currency reserves. According to the World Gold Council, between July and September 2026, central banks acquired a net of 321 tonnes of gold. During the same period, 211 tonnes were bought through gold ETFs. This demand may provide long-term support to gold prices. Although a significant portion of silver demand is also driven by industrial use.
Important Points When Investing in Silver
Silver investors should be prepared for sharp price changes, as its value is influenced by both investment demand and industrial needs. Increased demand for silver in sectors such as solar panels and electronics can raise its price. However, a weakening of industrial demand can also create downward pressure on prices. Therefore, when investing in silver, it is necessary to consider not only the potential for growth but also the risk of decline.
What is better to buy: jewelry, coins, or gold-silver ETFs?
If the purchase is for family or wedding jewelry, jewelry might be the best option. But if the goal is purely investment, options like coins, bars, and ETFs, where the metal is not stored at home, can be considered. Jewelry includes manufacturing costs that cannot be recovered upon resale. Meanwhile, investing through an ETF allows for capital deployment without owning physical metal. Each option carries its own costs and risks.
What to look out for when buying gold and silver?
Experts believe that the potential for long-term investment in gold and silver remains, but price fluctuations may continue in the near future. Navneet Damani and Manav Modi from Motilal Oswal advised considering a purchase during price dips rather than rushing to buy at high prices. Thus, when acquiring these precious metals, one should consider their needs, budget, and investment horizon, rather than relying on the hope of inevitable price increases in the coming days.
