Gold Prices Drop 23% from Peak Should Investors Buy Ahead of Diwali

Gold prices have dropped more than 23% from their January 2026 peak, creating a potential buying opportunity ahead of the Diwali festival. International spot gold reached a record high of $5,419 per ounce on January 28, 2026, but fell to just over $4,155 per ounce by October 5. In India, gold prices on the MCX dropped from a yearly high of Rs 2,47,917 per 10 grams to Rs 1,49,270 per 10 grams during the same period.

Analysts recommend a staggered approach to buying gold rather than making lump-sum purchases. Kaveri More, Commodity Technical Analyst at Choice Broking, suggests that gold may remain volatile and could see further downside before stabilizing, with support around $3,950 per ounce. She advises investors to maintain a sensible allocation to gold and avoid deploying funds needed for short-term expenses.

Jewellers expect sales volumes to remain below last year's levels as consumers become more selective and cautious. Colin Shah, MD at Kama Jewellery, anticipates occasional spikes of 15-20% in demand during the peak festive season, with average ticket sizes ranging from Rs 1.5 lakh to 3 lakhs. Consumers are increasingly opting for lightweight contemporary jewellery that fits within defined household budgets.

For investment purposes, gold ETFs are recommended to avoid jewellery-making charges. Buyers can purchase gold according to their needs for festive or jewellery requirements, while staggered buying over the next few weeks is suggested for investors.