Gold Prices Slip Ahead of Diwali Amid Fed Rate Outlook
India's gold price has fallen about 20% from its January peak and is trading near Rs 1.43 lakh per 10 grams as investors watch the U.S. Federal Reserve's upcoming decision.
Gold prices are under close watch this festive season as the U.S. Federal Reserve prepares to announce its interest-rate decision. International spot gold remains above the $4,000-per-ounce threshold, while in India the metal has dropped nearly 20% from its record high of Rs 1,76,306 per 10 grams recorded on Jan. 29. The current price is around Rs 1,43,000 per 10 grams of 24-karat gold, with local rates varying by city but generally staying near Rs 14,000 per gram.
The upcoming Diwali festival traditionally drives strong demand for gold, especially on Dhanteras, when many Indian buyers purchase coins, bars and jewellery. Market participants are debating whether the price dip will continue.
"The Fed is unlikely to raise rates in today's meeting, but any hint of future hikes could push gold lower," analysts said, noting that higher rates raise the opportunity cost of holding a non-interest-bearing asset and can strengthen the dollar, making gold more expensive for holders of other currencies.
Despite the short-term decline, analysts note that gold remains a key investment, historically delivering about 10% annual returns. Reuters-cited forecasts project a median price of $4,495 per troy ounce for 2026, with an increase to around $4,650 in 2027, supported by central-bank buying and physical demand.