Dhanteras-Diwali gold rush: Fund Managers flags volatility; financial planner shares buying strategy

Satish Dondapati, Fund Manager at Kotak Mahindra AMC, believes the recent correction has not changed gold's long-term investment appeal, although prices could remain under pressure in the near term.

"Gold prices have corrected nearly 3% in US dollar terms over the past week, touching their lowest level in almost a year," Dondapati said. However, gold has failed to gain much support as markets remain focused on the Fed's interest rate outlook.

"The recent correction does not change the long-term investment case for gold, particularly as high interest rates may not be sustainable for an extended period," Dondapati said.

He expects near-term volatility to continue and advises investors against deploying their entire investment at current levels. Instead, he recommends staggered purchases during price declines, while retaining gold as a long-term portfolio diversifier and hedge against uncertainty.

"Investors should avoid investing the entire amount at current levels and instead consider staggered buying on declines," he added.

Buying gold this Dhanteras? Jewellery and investment need different approaches

For households planning their Dhanteras purchases, the first question should be whether they are buying gold for personal use or as an investment.

Shweta Shastri, CFP and Founder of Finnora Wealth Studio, says there is nothing wrong with buying jewellery during the festive season, provided buyers account for making charges and stick to a predetermined budget.

"There is nothing wrong with buying gold on Dhanteras; what matters is deciding the form in which you buy it. If you love wearing jewellery, go ahead and buy it, but be mindful of making charges and stick to a pre-decided festive budget rather than trying to time the market," Shastri said.

From an investment perspective, however, gold should be treated as a portfolio diversifier and a hedge against uncertainty rather than an avenue for short-term returns.

Shastri suggests keeping gold allocation at around 5-10% of an overall portfolio, depending on an individual's risk appetite, financial goals and investment horizon. Such an allocation can provide diversification without making the portfolio overly dependent on an asset that does not generate regular income.

"If you are buying gold purely for investment, consider Gold ETFs or Gold Mutual Funds and invest in a staggered manner rather than making a large lump-sum investment simply because prices have corrected," she said.

She also cautioned investors against increasing their exposure without reviewing their existing holdings. Those whose gold allocation has risen above 10% following the recent rally should consider rebalancing rather than adding more, Shastri added.

Gold and silver demand likely to remain strong this festive season

Beyond investment considerations, gold and silver continue to enjoy strong cultural relevance among Indian households. Demand during Dhanteras and Diwali is also supported by purchases ahead of the wedding season.

Samit Guha, Managing Director and CEO of MMTC-PAMP, expects consumer interest in gold and silver, particularly bars and coins, to remain resilient during the festive period.

"This festive season, consumer interest for gold and silver, especially bars and coins, will continue to remain resilient due to the deep cultural relevance these precious metals hold among Indian households," Guha said.

However, elevated gold prices could encourage buyers to opt for smaller-denomination bars and coins, making lower-ticket purchases more relevant.

Guha also expects investment preferences to diversify, particularly among younger consumers, with digital gold products gaining traction because of their convenience.

"Therefore, the demand for products and services like digital gold, which offer convenience, is expected to further strengthen during this period," he added.

Should investors look beyond gold this Diwali?

While gold and silver remain important portfolio assets, Tapan Patel, Fund Manager – Commodities at Tata Asset Management, believes investors should also consider the wider commodities market when building a diversified portfolio.

Patel said gold and silver have seen a healthy correction in 2026 following the record rally during the corresponding period last year. Inflation, elevated bond yields and central bank tightening have weighed on prices in the short term.

However, he believes longer-term factors, including concerns over global economic growth, central bank diversification, de-dollarisation and US fiscal risks, could continue to support precious metals.

"The current environment of global uncertainty, macro headwinds and geopolitical factors have given rise to the investment into commodities beyond gold and silver," Patel said.

He advised investors to focus on portfolio diversification and asset allocation rather than chasing recent price momentum.

"This Diwali, investors may look to build modern portfolios with optimal asset allocation into commodities to protect the overall portfolio rather than chasing momentum," he added.