Dhanteras effect or trade tensions? Gold soars to all-time high

Gold prices in India reached unprecedented levels on Friday, October 17, with 24-carat gold surging past the Rs 1.3 lakh mark across major cities, just a day before Dhanteras—one of the most auspicious occasions for buying the precious metal.

The dramatic rally, driven by global economic uncertainties and festive demand, marks a significant milestone for Indian buyers preparing for the Diwali celebrations.

According to multiple market tracking sources, gold prices on Friday witnessed substantial gains.

In major metropolitan cities including Delhi, Mumbai, Bengaluru, Chennai, and Kolkata, 24-carat gold was trading between Rs 1,32,770 to Rs 1,33,770 per 10 grams.

The 22-carat variety, more commonly used for jewellery, reached Rs 1,21,700 to Rs 1,22,000 per 10 grams across these cities.

Even 18-carat gold crossed the Rs 1 lakh threshold, settling around Rs 99,580 to Rs 1,01,000 per 10 grams.​

Gold dips on Dhanteras 

On Dhanteras day itself—Saturday, October 18—gold prices showed mixed movements across different market benchmarks. According to the Multi Commodity Exchange (MCX), 24-carat gold declined to Rs 1,27,320 per 10 grams, down clsoe to 1 per cent from Friday's close. However, in retail markets across major cities, 24-carat gold was trading at Rs 1,32,770 to Rs 1,32,920 per 10 grams, while 22-carat gold was available at Rs 1,21,700 to Rs 1,21,850 per 10 grams. These prices represented a slight decline from Friday, October 17, when gold had reached its historic peak.

The All India Sarafa Association and other industry sources confirm that gold has appreciated by approximately 65-66 per cent year-to-date in India. This represents one of the sharpest annual rallies in decades, with gold prices rising from approximately Rs 76,250 per 10 grams during Dhanteras 2024 to current levels exceeding Rs 1.32 lakh.​

Internationally, gold reached an all-time high of $4,379.60 per ounce on Thursday, before settling around $4,250 to $4,303 per ounce on Friday. This marks the strongest weekly performance for gold since March 2020, with prices gaining approximately 8 per cent during the week. The precious metal has surged more than 60 per cent year-to-date globally, driven by multiple factors including geopolitical tensions, expectations of Federal Reserve rate cuts, and robust demand for safe-haven assets.​

Silver prices, meanwhile, showed contrasting movement in India. After touching highs near Rs 1.90 lakh per kilogram earlier in the week, silver corrected to Rs 1,84,000 to Rs 1,85,000 per kilogram on Friday. Globally, silver reached an all-time high of $54.48 per ounce before retreating to around $53.43 per ounce.​

Dhanteras and the US govt shutdown

Market analysts attribute the extraordinary gold price surge to several interconnected factors. The ongoing US government shutdown, which began on October 1, 2025, has created economic uncertainty and delayed key data releases.

Now entering its third week with no resolution in sight, the shutdown has furloughed approximately 900,000 federal employees and left another 700,000 working without pay.​

Escalating US-China trade tensions have significantly contributed to safe-haven demand. President Donald Trump threatened to impose 100 per cent tariffs on Chinese goods following China's expansion of export controls on rare earth elements—critical materials for electronics, batteries, and defence applications. China controls 85-90 per cent of global rare earth processing capacity, and the new restrictions have sparked concerns about supply chain disruptions.​

The US dollar index has weakened, falling below the 99 level—a development that typically supports gold prices.

Federal Reserve Chair Jerome Powell's recent remarks highlighting labour market weakness have reinforced expectations for additional interest rate cuts, with markets pricing in at least two more quarter-point reductions this year.​

India's festive season demand has amplified domestic price pressures. The World Gold Council noted that domestic gold prices have been trading at a sustained premium over international prices, reaching $25 per ounce by mid-October—the highest level since July 2024. This premium reflects strong buying interest despite record prices, with investment demand particularly robust as investors seek portfolio protection amid market volatility.

​Festive buying in India

Despite the price shock, jewellers and market observers report continued demand for Dhanteras. The tradition of buying gold on this auspicious day remains strong, though purchasing patterns have shifted. Consumers are gravitating toward lightweight jewellery, smaller denominations, and investment products like coins rather than heavy ornamental pieces.​

Industry insiders note that increased household liquidity from GST reforms, pay commission arrears, and easing inflation have supported discretionary spending capacity. However, the high prices are affecting overall volume demand, with smaller retail stores experiencing reduced footfall compared to larger chains and high-end boutiques catering to wedding customers.​

The rally continues a six-decade journey for gold in India. Historical data shows that 10 grams of 24-carat gold cost just Rs 63 in the 1960s, climbing to Rs 4,400 in 2000, Rs 48,651 in 2020, and now exceeding Rs 1.3 lakh.

The current surge represents the fastest $1,000 increase in gold's history, accomplished in just 207 days compared to 15 years for the previous $1,000 gain.​

Looking ahead, analysts remain bullish on gold's prospects. HSBC recently raised its 2025 average gold price forecast by $100 to $3,455 per ounce, and projected prices could reach $5,000 per ounce in 2026. This is further supported by continued geopolitical uncertainties, expectations of monetary easing, central bank accumulation exceeding 350 tonnes year-to-date, and record ETF inflows surpassing $75 billion.​

As Dhanteras celebrations unfold across India today, buyers face a transformed market where gold, long considered an essential part of festive traditions, commands prices that seemed unimaginable just months ago.

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