Summary of this article
Gold prices dropped significantly ahead of the festive season.
Surging US Treasury yields caused recent global price corrections.
Central bank purchases ensure strong long-term gold investment value.
The festive season is around the corner and the demand for gold is expected to go up. Many investors also view the festive season as an auspicious time for making fresh investments, especially around Dhanteras, which is scheduled to be celebrated on November 6, 2026.
However, nearly a month ahead of the festive occasion, gold prices are significantly off their record highs. International spot gold is trading at $4,184.96 per ounce, down 0.21 per cent on October 12, 2026. At present, the precious metal remains roughly 23 per cent below its historic all-time high of $5,417 reached earlier this year.
Domestic retail rates have mirrored this trajectory. Gold futures with December 4 expiry are currently trading at Rs 1,50,001 per 10 grams, down by nearly 1 per cent. However, compared to their all-time high level of Rs 1,77,590 per 10 grams, the futures are currently trading 16 per cent lower.
Why Did Gold Prices Retreat From Record Highs
In the past few months, gold has corrected from its highs both globally and domestically on account of a sharp repricing. As the benchmark US 10-year Treasury yield surged from approximately 4.10 per cent in October 2025 to 5.27 per cent as of October 2026.
The breaching of the critical 5 per cent mark in mid-September made gold less lucrative for institutional investors. One major reason is that gold generates no coupon or dividend yield, and on the other hand, the sovereign debt offered them higher risk-free yields. In turn, this led to gold prices falling.
Additionally, near-term cyclical pressures in the form of global markets are pricing in an 89 per cent probability of a US Federal Reserve interest rate hike in October, cemented expectations of a higher-for-longer monetary environment, and supporting of the dollar. Institutional traders have booked profits following gold’s extraordinary multi-year surge.
Is Gold Losing Its Sheen
Gold’s retreat from its historic peaks has left many investors wondering whether gold has lost its sheen? However, a recent report by Mirae Asset titled Why Gold ETF Now? highlights that the broader investment case for gold remains entirely intact despite the pullback.
The fund house highlighted in the report that market pullbacks are a normal characteristic of extended commodity cycles and that much of the anticipated monetary tightening and yield expansion is already reflected in prevailing market prices. The fund house said in the note that temporary rate adjustments have not derailed the underlying trajectory of gold.
“Rising yields explain the correction. They do not invalidate the long-term gold thesis,” Mirae Asset said in its report.
The fund house added that despite the pullback it maintains a ‘constructive stance’ on gold over the medium-to-long term. According to the report, several structural supports are expected to continue to underpin global demand.
The fund house added that central banks globally continue to amass physical gold to diversify reserves away from foreign exchange risks. Total central bank purchases are projected to reach roughly 700 tonnes in 2026, remaining well above the historical annual average of 470 tonnes recorded between 2010 and 2021.
Additionally, the report also cited industry surveys which indicate that 89 per cent of central banks expect global gold reserves to expand, with 45 per cent actively planning to increase their holdings.
Further, the broader de-dollarisation trend among emerging economies is also expected to drive up the demand for gold. More and more countries are seeking reserve assets characterised by deep liquidity, reliable store-of-value attributes, and zero sovereign credit counterparty risk.
Ongoing geopolitical tensions surrounding critical trade routes, sovereign debt sustainability, and energy security also continue to underscore gold’s essential role as a portfolio hedge.
Additionally, strong domestic seasonal consumption driven by Navratri, Dussehra, Dhanteras, Diwali, and the upcoming wedding season are also expected to add to the gold demand.
Thus ahead of the festive season, the fund house urged investors to take a medium-to-long-term view on gold rather than react to short-term fluctuations. While elevated US Treasury yields and Federal Reserve rate decisions are expected to drive intermittent near-term volatility, the report added that much of the monetary tightening is already factored in.
