📰Gold Prices Fall | Daily India Briefing

Happy Diwali! Today’s deep dives: Last week, Indians owned $3.8 trillion in gold, but now that valuation is being threatened with a global collapse in the commodity’s price. The U.S. and India are nearing a trade deal that could cut tariffs by 15-16 percent. Talks of a U.S-India trade deal caused oil prices to rebound sharply.

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1. Gold Falls After Dramatic Rise

One of India’s most popular asset classes, gold, saw extended losses in a choppy session after suffering their worst rout in over 12 years. About 70 to 75 percent of Indian households own, collectively, $3.8 trillion in gold, at the commodity’s peak price. Spot gold tumbled as much as 3 percent early in European trading to below $4,080 (₹363,120) an ounce, a follow-on from the 6.3 percent collapse seen the previous day. 

In India, the domestic price for 24 carat gold stayed flat, before edging lower as the global sell-off filtered through. Dealers reported premiums above $25 (₹2,225) an ounce over official domestic prices as festival buying ahead of Dhanteras and Diwali pushed demand for coins and bars.

Despite high prices, Indian investment demand remains red-hot. In September, gold ETFs in India recorded net inflows of $947 million (₹83.6 billion)—up 282 percent m-o-m—while assets under management hit a record $10.2 billion (₹901 billion). Analysts say households are increasingly using gold as a hedge against currency risk and volatility, shifting away from physical jewellery purchases toward investment products.

The divergence between jewellery and investment demand has become more pronounced. Jewellery volumes in India during festival periods dropped by nearly 30 percent versus last year as record bullion prices squeezed affordability. Yet total value has risen thanks to higher unit prices. 

Global macro factors are also fueling the rally and making the correction sharper. Safe-haven flows into gold amid geopolitical tension, expectations of U.S. rate cuts, weakening of the dollar and fears of fiscal “debasement” have supported gold this year, with prices up about 55 percent. But now banks are cautioning the run-up was unsustainable. For Indian investors, the key takeaway is two-fold: On the one hand, gold retains strong structural and cultural appeal, especially as a hedge against currency weakness, inflation, and global risk. On the other hand, the recent volatility underscores timing risks and the importance of disciplined entry.

2. The US is Prepared to Cut Tariffs by 15-16 percent

India and the US are moving closer to a trade agreement that could significantly lower tariffs on Indian exports, potentially cutting duties to about 15–16 percent from the current 50 percent, according to a report in Mint citing people familiar with the matter.

Under the emerging framework, India may agree to gradually scale back imports of Russian oil (a key U.S. concern) while opening its markets to more American agricultural products, specifically non-genetically modified corn and soymeal. The two sides are hoping to finalize the accord in time for a possible meeting betweenTrump and Modi at the Association of Southeast Asian Nations (ASEAN) summit in Kuala Lumpur from October 26 to 28.

The prospective deal marks a potential thaw in relations after months of tension. Last month, Washington imposed 50 percent tariffs on Indian exports, citing New Delhi’s continued purchases of Russian crude and persistent trade barriers for U.S. goods. The duties led to a sharp deterioration in ties between the two democracies, which had been steadily strengthening in recent years.

Despite the strain, both governments have kept communication channels open. During a Diwali celebration at the White House, Trump said Modi had assured him in a recent call that India would “wind down” its Russian oil purchases. While Modi acknowledged speaking with Trump on X, he did not reveal what was discussed, and India’s foreign ministry has refrained from confirming any shift in energy policy.

Signs of movement are beginning to appear. Indian state refiners have indicated plans to trim imports from Russia, while Reliance Industries, traditionally the country’s largest buyer of Russian crude, has begun sourcing more oil from the Middle East. Negotiators from India reported “solid progress” in talks held in Washington last week, with both sides optimistic about a breakthrough that could reset trade relations and provide a diplomatic win for Trump and Modi ahead of their potential ASEAN meeting.

3. Oil Rebounds on US-India Optimism

Oil prices rebounded sharply after reports suggested that the US and India are edging closer to a trade deal that could reshape global crude flows. The agreement, according to people familiar with the matter, would see India gradually curtail its imports of Russian oil.

Brent crude climbed as much as 2.1 percent to trade above $62 (₹5,518) a barrel, extending its recovery from recent five-month lows. The rally comes after weeks of concern that the global market was tipping into oversupply amid rising US output and sluggish Chinese demand. A potential US-India accord, however, could help absorb some of the excess barrels circulating in the market.

Trump told reporters that Modi had assured him India would “wind down” purchases from Russia, though Modi’s official statement made no direct reference to the issue. India’s refiners have previously indicated that while they may scale back imports, they do not intend to halt them entirely. Despite Wednesday’s bounce, oil remains on track for a third consecutive monthly loss, pressured by mounting evidence of a global surplus. That weakness has created an opening for the US government to replenish its SPR, with plans to buy one million barrels for delivery in December and January.

See you tomorrow.

Written by Eshaan Chanda & Yash Tibrewal. Edited by Shreyas Sinha.

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