Buying Gold This Diwali 2025? Here's Why The Yellow Metal Is Shining Brighter Than Before

Every Diwali brings with it the familiar glitter of gold, an old tradition that somehow never loses its relevance across India. However, this year, the prices of the yellow metal skyrocketed, hovering at all-time highs of above the Rs 1 lakh mark. This festive season, the price movement of gold is a reflection of the world's economic pulse.

According to the Gold Special Report – Diwali 2025 by Religare Broking, gold's rally this year has less to do with sentiment and more to do with global uncertainty.

Global Tensions, Local Impacts

The report notes that ongoing geopolitical conflicts, from the Middle East to Eastern Europe, continue to drive investors toward gold as a safe haven. Add to that the continuing Russia–Ukraine war and strained U.S.–China relations, and you get an environment where risk appetite naturally fades. In such times, gold tends to outperform, offering stability when other asset classes struggle.

The report notes that central banks too have played their part in the gold price movement rally. The U.S. Federal Reserve ended its rate-hike cycle with a 25-basis-point cut in September, while the Reserve Bank of India held rates steady at 5.5 per cent.

Lower interest rates, the report notes, reduced the opportunity cost of holding non-yielding assets like gold which is a factor that historically boosted its appeal.

The U.S. dollar weakened nearly 10 per cent in 2025, while the Indian rupee also slipped by 5 per cent. A weaker rupee makes imports costlier, leading to higher domestic gold prices. The demand for gold, however, has remained solid gaining more traction during the festive season.

Gold continues to serve a dual purpose in India as both a cultural anchor and a financial hedge.

Inflation, too, hasn't gone away. With U.S. core CPI at 3.1 per cent earlier this year and India grappling with its own price pressures, gold's role as an inflation hedge has come back into focus. The report highlights that in periods of persistent inflation, gold tends to retain value even as currencies lose purchasing power.

Central Banks and ETFs Back the Bullion

The report also points to the consistent buying by global central banks wherein for the third straight year, purchases have exceeded 1,000 tonnes. China added 13 tonnes in the first quarter, while India's reserves stood around 880 tonnes as of August.

On the retail side, Indian gold ETFs have seen renewed enthusiasm, drawing a record inflow of $10 billion in September. Globally, inflows crossed $64 billion which is the highest since the pandemic years.

Future Outlook: What Should Investors Do?

Gold prices have surged from Rs 98,500 to nearly Rs 1,26,930 per 10 grams between the months of August and October. This marked a sharp two-month rally and the trend currently remains upward, however, the report notes that short-term corrections are possible.

The broking firm suggested in its report that fresh buying opportunities may arise if prices go down towards Rs 1,14,000-Rs1,18,000 levels with potential upside targets of Rs 1,35,000 and Rs 1,42,000 per 10 grams.

For investors, the key lies in timing, and for traditional buyers, perhaps in patience. Whether purchased as an ornament or as an investment, gold this Diwali is more than just tradition; it is a reflection of how uncertainty continues to shape financial choices across the world.