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Below the Views on Dhanteras from Mr. Satish Dondapati, Fund Manager, Kotak Mutual Fund

Expectations on gold/ jewellery sales despite the high price

During the 2025 festive season, gold and silver prices surged significantly in India, with gold reaching record highs around Rs.12,900 per gram and silver crossing Rs.1.88 lakh per kilogram. High gold prices led to a 10%-15% decline in gold sales, while buyers increasingly opted for more affordable 18-carat and 14-carat options. Meanwhile, silver sales rose to around 30–35%, as buyers shifted to the cheaper metal despite rising prices. Supply shortages pushed premiums higher, impacting retail and investment demand. Overall, silver outshined gold, driven by affordability and strong festive demand.

Outlook for gold in the domestic and international markets

Gold prices are showing strong momentum after gold in USD surpassed $4,300 last night, marking its best weekly performance in five years. In India, gold futures continued to trade above Rs.1,31,600 during the session. The sharp rise reflects growing investor demand for safe-haven assets amid global uncertainties such as concerns over the US economy, escalating US-China trade tensions, and signs of stress in the financial system. Additionally, sustained central bank purchases and expectations of a US interest rate cut have supported gold prices at elevated levels. Overall, we remain bullish on gold in the long term, as long as central bank demand persists. In the medium to short term, any corrections driven by dollar strength or policy shifts present buying opportunities for investors.

A quick perspective on the USD movement and its impact on gold prices

In the last one year, the US dollar declined around 5.60%, appearing to lean towards weakness or a neutral-to-negative prospect, primarily influenced by anticipated economic slowdown, potential monetary policy shifts, and ongoing trade tensions. This decline has benefited the precious metals rally as the DXY (Dollar Index) has an inverse correlation with gold. When the dollar weakens, gold becomes cheaper for holders of other currencies, boosting demand and pushing prices higher. Additionally, a weaker dollar often signals investor uncertainty or inflation concerns, both of which traditionally drive investors toward gold as a safe-haven asset. Conversely, if the dollar strengthens due to hawkish Fed policies or positive economic data, gold prices tend to face downward pressure. Hence, monitoring USD trends remains crucial for forecasting gold price movements and understanding broader market sentiment.

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