Gold prices drop as record global rally loses steam: Is it time to buy or sell? Experts weigh in

Gold prices fall: The prices of gold dropped on India's Multi Commodity Exchange (MCX) on Monday. MCX Gold December futures dropped 0.78% to ₹1,22,490 per 10 grams at 9:32 AM, while MCX Silver December contracts fell 1.07% to ₹1,45,898 per kg.

According to data from the Indian Bullion and Jewellers Association (IBJA), gold on 28 October was priced at ₹1,18,043 (24-carat) and at ₹1,08,127 (22-carat). A day before, the corresponding prices were ₹1,21,077 and ₹1,10,907 on 27 October. The fall has happened ahead of US Fed Policy meet this week as traders have revised their positions.

Notably, gold prices hit a record high less than two weeks ago before they started to fall. On Dhanteras (18 October), consumers went on a buying spree despite gold prices rising to ₹1,30,000 per 10 gram.

Need to have right expectations

Market analysts attribute the recent decline to profit-taking following a sharp rally. As the festive season demand eased and investors re-evaluate their risk exposure, gold’s appeal as a safe-haven asset has seen a temporary dip.

Experts point out that, although the overall view is bullish, it is now crucial to set expectations right because the time for quick gains is over.

“Global gold prices are already off 10% from their all-time highs. The correction has been swift, with most ETFs, which had started trading at premiums, back to fair value or even discounts. Setting the right expectations is important now as time for quick gains is over and the yellow metal has a history of consolidating for long periods. In the last three-year returns, Gold-LMBA (in Indian rupee) has delivered around 41% CAGR, much above its long-term returns of 15%. Therefore, for investors looking for fresh exposure, staggered entry will be better,” says Siddharth Alok, AVP Investments, EpsilonMoney.

Meanwhile, Santosh Meena, Head of Research at Swastika Investmart, attributes the fall to surging US equity market and fading US-China trade tensions.

“Gold’s vertical rally has hit a sharp correction. Yet, the overall view remains bullish, treating the current move as an intermediate correction. Further Fed rate cuts could provide a floor for prices, as the DXY is still trading below 100. MCX Gold should find strong support around ₹115,000– ₹116,000, but a breakout requires a reclaim of the ₹122,000 resistance,” says Meena.

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