Planning to invest in gold and silver this Diwali? 7 experts decode the risks, outlook and allocation strategy

Buying gold and silver during Diwali is a long-standing tradition in India, with many investors also viewing the festive season as an opportunity to review their portfolios and consider fresh investments in precious metals. However, after a strong rally followed by a sharp correction in 2026, investors may be wondering whether to add to their gold and silver holdings, wait for prices to stabilise or rebalance their existing exposure.Experts believe that while gold and silver continue to have a role in portfolios, investors should be mindful of near-term volatility, interest rate movements and their overall asset allocation. Their views differ on the preferred metal and the ideal allocation, but they broadly emphasise the importance of avoiding momentum-driven decisions.What is driving gold and silver prices?Gold and silver prices have faced pressure from rising energy prices, inflation concerns and hawkish signals from the US Federal Reserve. These developments have reduced expectations of monetary easing and weighed on precious metals.Also Read | Gold vs silver ETFs: Which metal offers better opportunity for investors this Diwali?Rahul Khetawat, Senior Vice President and Fund Manager at 360 ONE Asset, said that the key factors to watch in FY27 include signals from the US Federal Reserve on interest rates and inflation, as well as developments towards a resolution of the conflict in the Middle East. Central bank purchases and investment demand continue to provide support to precious metals.Tapan Patel, Fund Manager – Commodities at Tata Asset Management, said that inflation, elevated yields and central bank tightening have dominated the short-term outlook, despite supportive long-term factors. However, he believes concerns around global growth, central bank diversification, de-dollarisation and US fiscal sustainability could continue to support long-term investment demand for gold and silver.Patel also pointed to the impact of geopolitical uncertainty and changing weather patterns on commodity prices. He said investors have increasingly recognised the benefits of having commodity exposure in their portfolios.While both metals have a place in portfolios, some experts currently favour gold over silver. Khetawat said 360 ONE Asset's portfolio positioning is tilted towards gold. Given the prevailing macroeconomic and geopolitical uncertainties, the fund house prefers a measured allocation to precious metals, with a relatively larger share in gold.He believes gold may offer better risk-reward in the current environment because of inflation concerns, geopolitical risks and broader macroeconomic uncertainty. Silver may also present opportunities, but its price movements are influenced by industrial demand and broader economic activity, apart from investment flows.Satish Dondapati, Fund Manager at Kotak Mahindra AMC, said gold prices have corrected nearly 3% in US dollar terms over the past week, touching their lowest level in almost a year. Softer US bond yields and a weaker dollar could support prices, but the Federal Reserve's hawkish stance and expectations of higher interest rates for longer have kept gold under pressure.He added that the ongoing Iran conflict has disrupted global energy markets, keeping crude oil prices elevated and adding to inflation concerns. Despite these geopolitical risks, gold has struggled to gain support as markets remain focused on the US Federal Reserve's interest rate outlook.Dondapati believes gold may remain under pressure in the near term, with further volatility possible. He advised investors against deploying the entire investment amount at current levels and suggested staggered buying during price declines. However, he said gold can continue to form part of a long-term portfolio as a hedge against uncertainty and for diversification.Should investors buy more gold after the correction?Kalpen Parekh of DSP Mutual Fund cautioned investors against increasing exposure to gold simply because it has delivered strong returns in recent years.He said gold should be viewed as a portfolio diversifier rather than an asset in which investors should keep chasing returns. Unlike equities, gold does not have underlying earnings or cash flows, and its price is influenced by global uncertainty, interest rates, currencies and investor demand.Also Read | SIFs gain investor traction with over Rs 38,000 crore in assets. Should investors add them to their portfolios this Diwali?Parekh said investors who are underweight on gold may find the recent 25% correction a relatively better opportunity to add to their allocation. However, those whose gold exposure has increased significantly following the rally may consider rebalancing some of their holdings into other asset classes.He added that investors do not need to exit gold or keep adding to it based on recent price movements. The objective of asset allocation is to hold different asset classes that behave differently across market cycles, rather…