Gold Hits ₹1.22 Lakh/10g as Silver Soars Ahead of Diwali 2025
Gold prices surged past the ₹1.22 lakh mark for 10 grams on Tuesday, October 7, 2025, while silver vaulted to record highs across major Indian cities. The rally, fueled by festive‑season buying and global market cues, has investors scrambling to lock in gains before Diwali. In Delhi, 24‑carat gold fetched ₹1,22,070 per 10 grams; Kolkata and Mumbai were just a whisker lower at ₹1,22,020, and Chennai posted the top price at ₹1,22,180. Meanwhile, silver traded at ₹1,56,100 per kilogram in Delhi, Kolkata and Mumbai, with Chennai jumping to ₹1,67,100. gold prices have climbed 50.1 % year‑to‑date, and silver is up a staggering 63.4 %.
Current Price Snapshot
According to market data released at 9:42 AM IST, the 24‑carat gold rates averaged ₹12,202 per gram nationwide. The 22‑carat variant lingered around ₹11,185 per gram, and 18‑carat gold hovered near ₹9,152 per gram. Silver, on the other hand, saw a 12 % jump in just 30 days, pushing the metal to ₹1,56,100 per kilogram in most metros.
Drivers Behind the Surge
The premium on Indian bullion mirrors several macro‑economic forces. A dovish stance from the U.S. Federal Reserve, a weakening dollar, and steady inflows into gold exchange‑traded funds (ETFs) have all added upward pressure. Domestically, the run‑up to Diwali – traditionally the biggest jewelry‑buying window – has amplified demand, especially in tier‑one cities where consumer sentiment is buoyant.
Supply‑side constraints also play a role. Recent mining strikes in South America and tighter export curbs from China have choked global supply, nudging prices higher. Add to that a depreciating rupee, and imported bullion becomes pricier, further supporting domestic rates.
Analyst Forecasts
"Key drivers of bullishness include dovish Fed policy, a weaker US dollar, continued ETF inflows, and robust Indian festive demand," said Richa Chainani, Senior Market Analyst at ETMarkets. She projects 24‑carat gold could hover between $3,950‑$4,000 internationally, translating to ₹1,20,000‑₹1,22,000 on the MCX by Diwali.
Manoj Kumar Jain, Head of Commodities at Prithvifinmart Commodity Research highlighted September’s 10 % gold and 15 % silver gains, dubbing it a "super‑bull run." He expects gold to breach ₹1,22,000 by Diwali and touch ₹1,25,000 by year‑end, while silver could climb to ₹1,58,000‑₹1,60,000.
Ventura Securities’ Director Juzer Gabajiwala added, "Clearly, gold is no longer just emotional; it is economic armour. Its relevance has gone beyond lockers and ornaments; it now stands as both a portfolio hedge and a trusted store of value."
Investor Sentiment and Central Bank Activity
DSP Mutual Fund explained the phenomenon as a "Gold Put" – a term coined for the persistent, less‑price‑sensitive buying of gold by central banks. Over the last four years, central banks have purchased more gold than in the preceding 21 years combined, shifting the metal’s share in sovereign reserves ahead of the US dollar for the first time since 1996.
ETF inflows have mirrored this trend. According to data from the World Gold Council, inflows into gold ETFs grew by 18 % in the first quarter of 2025, adding another layer of demand support.
Risks and Outlook
While the upside looks tempting, analysts warn of short‑term volatility. Profit‑booking by traders, a sudden rebound in the US dollar, or a de‑escalation of geopolitical tensions could trigger price corrections. "Market stabilization could occur due to profit collection, US dollar strengthening, or reduced global tensions," noted one senior trader (who wished to remain anonymous).
Nevertheless, the medium‑term outlook remains bullish. With the rupee projected to stay under pressure and green‑energy projects increasing industrial silver demand, both metals appear poised for further gains heading into Diwali.
What Diwali Means for Bullion Buyers
Diwali 2025 is expected to be a watershed moment for the Indian jewelry market. Retailers anticipate a 20‑25 % surge in sales, driven by higher disposable incomes and festive gifting traditions. This demand surge traditionally lifts gold prices by 5‑7 % in the two weeks leading up to the festival.
For investors, the festive window offers a dual opportunity: capital appreciation on physical gold and silver, and potential arbitrage through futures contracts on the MCX.
Frequently Asked Questions
How will the rise in gold prices affect Indian jewelry shoppers during Diwali?
Higher gold prices typically push retailers to offer more promotions and smaller‑size jewellery pieces to keep demand steady. Shoppers may see a rise in gilt‑set designs and an increase in bank‑finance options to offset price hikes.
What is driving the sharp increase in silver prices this year?
Beyond festive demand, industrial use in photovoltaics and electric‑vehicle battery components is surging. Combined with supply bottlenecks in major mining regions, these factors are propelling silver to multi‑year highs.
Will central bank gold purchases continue to support prices?
Historically, central banks buy gold as a hedge against currency volatility. With the US dollar expected to stay weak and global uncertainties lingering, central banks are likely to keep buying, which underpins price strength.
What risks could cause a short‑term dip in gold or silver prices?
Potential triggers include a rapid US dollar rally, profit‑taking by large institutional investors, or a de‑escalation of geopolitical tensions that reduces safe‑haven demand.
How can investors benefit from the current bullion rally?
Diversifying between physical gold, silver ETFs, and futures contracts can capture upside while managing liquidity. Many advisers suggest allocating 5‑10 % of a portfolio to precious metals during periods of monetary uncertainty.
