Gold rate rebounds: Is it time to buy or should you book profits?

Gold rate rebounded sharply on Friday, supported by a weaker dollar, healthy spot demand, and persisting geopolitical uncertainties.

MCX gold April futures jumped over 2% to ₹1,55,374 per 10 grams, while MCX silver March futures jumped almost 3% to ₹2,50,300 per kg, driven by short covering and renewed hedging demand amid global uncertainty.

International gold prices also witnessed solid gains. U.S. gold April futures for April closed 1.8% higher at $4,979.80 per troy ounce.

The major drivers of a rebound in gold prices were a significant 0.20% decline in the US dollar index, making greenback-priced bullion cheaper for overseas buyers.

Moreover, expectations of US Fed rate cuts remain a key support for the yellow metal. A report of the University of Michigan suggested median one-year inflation expectations fell to 3.5%, the lowest since January 2025. This fuelled optimism for further US Fed rate cuts in the coming months.

On the geopolitical front, the talks between the US and Iran started on a positive note, but there was no significant clarity on the next round of talks, which is expected to continue.

Is it the right time to buy gold?

Experts expect gold prices to remain volatile and suggest buying on dips as the medium to long-term outlook remains bright.

"Our view is that this is not the end of the cycle. In fact, gold may still be in the early innings of a longer structural repricing," said Rishabh Nahar, Partner and Fund Manager at Qode Advisors.

Aggressive central bank buying is one of the key drivers why gold could remain on an upward trajectory for a longer period.

"Official data already shows central bank gold buying at multi-decade highs, yet several reports suggest that actual accumulation, especially by China, may be materially higher than what is formally disclosed. Historically, large reserve shifts away from the US dollar tend to be revealed with a lag, not in real time. Under-reporting during accumulation phases has precedent, and that opacity itself is a bullish signal rather than a neutral one," Nahar noted.

Equally important is the changing nature of retail demand. Gold ETFs are witnessing strong demand globally, indicating the yellow metal is no longer being bought only as a fear hedge, but as a deliberate portfolio allocation.

Another underappreciated factor is positioning.

Nahar pointed out that, unlike US equities, where ownership is crowded and returns are increasingly dependent on continued multiple expansion, gold remains under-owned at a global portfolio level.

"Even a modest reallocation by large pools of capital toward gold can have an outsized impact, given the relatively limited supply growth," said Nahar.

However, short-term traders may consider booking some profits.

Jigar Trivedi, Senior Research Analyst at IndusInd Securities, said gold can be volatile, especially during the short term.

“Momentum now appears stretched. Prices are hovering near supply zones where physical demand tends to thin and speculative length cools. For existing longs, partial profit-taking with a trailing risk cover looks sensible,” said Trivedi.

"Fresh buying should be selective, not aggressive, and ideally triggered only after consolidation or a clear macro cue such as dollar softening or bond yield compression. In the near term, strategy should focus on capital protection rather than chasing the rebound," said Trivedi.

Trivedi expects ₹1,60,000 per 10 grams as the next stop for MCX gold for the coming week.

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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.