Every festival season in India is a mixed bag for gold lovers. On one hand, jewellery demand swells, on the other hand, global headwinds can mute the joy. This time, after HSBC’s big forecast and a sharper-than-usual drop in international gold prices, the story has two chapters — correction now, rally later.
What Just Happened
In the days after Diwali, India’s domestic gold market is expected to open on a weaker note. International spot prices of gold dropped about 5.5 %, the steepest slip since August 2020. ([The Economic Times][1]) Meanwhile, HSBC raised its average forecast for 2025 to about $3,455/ounce (from previous $3,355) and sees 2026 potentially peaking as high as $5,000/ounce. ([Reuters][2])
The contrast is striking: a short-term drop, but a medium-term strong conviction.
Why the Correction Is Happening
There are three key reasons:
A stronger U.S. dollar and improving U.S.–China trade sentiment have reduced some of gold’s safe-haven appeal. ([The Economic Times][3])
Profit-taking after a strong rally earlier in 2025: gold had gained over 50 % year-to-date, so some pull-back was expected.
In India, festive buying often supports prices, but global cost pressures and logistics begin to bite after the peak.
Why HSBC Remains Bullish
If gold is slipping now, why is HSBC’s long-term view still hopeful? Because of four structural drivers:
1. Geopolitical risks & economic uncertainty: These remain elevated globally. ([The Straits Times][4])
2. Central bank and institutional buying: Banks are diversifying into gold, treating it as a portfolio hedge. ([Reuters][5])
3. Interest-rate outlook: If the U.S. Federal Reserve embarks on actual rate cuts, the tailwind for gold strengthens.
4. New buyers staying: HSBC notes that unlike earlier rallies, many of the new entrants are likely to stay in the gold space for diversification. ([Reuters][6])
So the logic is: short-term wobble, but medium-term upward bias.
What This Means for Indian Investors
For Indian buyers and savers, the environment looks like this:
Short-term price weakness after Diwali may offer a better entry point.
Domestic gold rates may lag international moves slightly due to import duty, rupee strength/weakness, and shipping impacts.
If you’re buying for saving/hedging, then holding through the next 12-18 months could make sense. If buying for short-term gains, tread with caution.
Keep an eye on policy moves, rupee behaviour, and global rate/central bank cues — they will matter more than just jewellery demand.
Key Takeaways
The recent drop in gold is likely a correction, not the end of the rally.
HSBC’s forecast for ~ $5,000/oz puts the risk–reward favourably tilted for patient investors.
Timing matters: festive rush may fade, but structural drivers remain.
In India, entry at the “weak moment” could be smarter than chasing after the high.
One afternoon in Mumbai, I observed a jewellery showroom emptying out just as global gold news turned negative. A guardian of generational savings walked out unsure. That moment captures it: gold is not just a metal—it’s emotion, tradition, assurance.
Yes, the ride may dip here and there. But if one buys gold for trust and tomorrow’s uncertainty hedge, then even a short correction is a chance, not a warning.
Because gold isn’t just about what it costs today—it’s about what it protects tomorrow.