Gold and silver prices slumped sharply this week as global investors turned to profit-taking after months of gains. The latest gold price decline comes alongside a stronger US dollar and easing geopolitical tensions, triggering a broad correction across precious metals.
Gold records biggest single-day crash in over a decade
Gold prices fell by as much as 6.3% in intraday trade, marking the sharpest single-day drop since 2013. Silver prices crashed 8.7% while platinum slipped over 7%, erasing part of the massive 2025 rally.
Throughout 2025, gold surged nearly 56%, driven by safe-haven demand and institutional buying. Silver gained more than 60% year-to-date before the current correction.
Why are gold and silver prices falling?
The gold price decline is driven by short-term market forces rather than a change in long-term fundamentals. Key reasons include:
Profit Booking: After a powerful rally, traders locked in gains as indicators showed overbought conditions.
Stronger US Dollar: The U.S. dollar index rose 0.4%, making gold costlier for global buyers and reducing immediate demand.
Improved global risk sentiment: Positive updates on US–China trade talks reduced the need for safe-haven assets like gold and silver.
Overextended positions: Heavy speculative buying earlier in the year made markets vulnerable to sudden liquidation.
Market outlook: Temporary correction, long-term support intact
Market analysts view the decline as a technical correction, not a reversal of the long-term uptrend. According to Standard Chartered, investor participation had ‘expanded too quickly’ and markets are now resetting.
Long-term gold support remains strong due to:
- Ongoing central bank gold purchases
- Inflation hedging
- Geopolitical risks
- Rising silver demand from green energy and EV production
RBI gold reserves: India continues buying despite price volatility
Despite the global gold price decline, the Reserve Bank of India (RBI) continues to strengthen its gold reserves.
RBI Gold Holdings (Latest Data – September 2025)
- Total Gold Reserves: 880+ metric tonnes
- Total Value: ~$95 billion
- Gold Purchased in 2025: 4 tonnes (Jan–Sep)
- Gold Share in Forex Reserves: 15%
Gold now plays a bigger role in India’s financial strategy compared to a decade ago, when it formed only 7% of reserves.
Why Is RBI Purchasing Gold?
The RBI continues gold accumulation for three key reasons:
Diversification: Reduce dependence on the US Dollar.
Hedging: Protection against inflation and market volatility.
Safe haven: Strengthen crisis reserves.
Central banks worldwide are increasing gold purchases to reduce reliance on Western currencies. India remains among the top 10 gold buyers globally.
| Country / Central Bank | Gold added in 2025 (until Sept) |
| People’s Bank of China | 100+ tonnes |
| Central Bank of the Republic of Türkiye | 45 tonnes |
| Reserve Bank of India | 4 tonnes |
| The Central Bank of the Russian Federation | Paused |
| National Bank of Kazakhstan | Paused |
India follows a cautious and strategic gold buying policy, unlike China and Turkey, which are on aggressive acquisition sprees.
Conclusion
While global investors are reacting to the gold price decline with caution, long-term demand for gold remains strong. The RBI continues to increase gold holdings as part of a strategic reserve diversification plan. Analysts believe this market correction is temporary and precious metals will remain crucial for financial security.
