Gold prices on MCX have corrected nearly 18 percent from their record high, triggering debate among investors over whether the fall has further to run or if this is a buying opportunity.
While near-term volatility is expected to remain high, analysts say the structural bull case for gold remains intact.
The recent fall is largely attributed to profit booking after a sharp rally.
MCX gold April contracts have slipped nearly 18 percent from their peak
Improving risk appetite has pushed investors towards equities
Temporary shifts in positioning have added to volatility
Experts caution that gold is not a one-way trade and short-term corrections of around 10 percent are common after strong rallies.
Despite the correction, fundamental drivers continue to support gold.
The People’s Bank of China has added gold for the 15th consecutive month
Holdings rose by 40,000 troy ounces in January
Central banks continue diversifying away from the US dollar
This steady institutional demand is seen as a structural floor for prices.
Geopolitical tensions remain elevated
Geoeconomic risks continue globally
US Fed rate cut expectations support bullion
Analysts say these factors prevent a sharp structural breakdown in prices.
Some experts say a technical correction of around 10 percent is possible.
Anindya Banerjee of Kotak Securities says a move towards ₹1.4 lakh per 10 grams would represent roughly a 10 percent correction from recent levels and cannot be ruled out from a technical standpoint.
However, he stresses that:
The broader dollar trend for gold remains upward
Any correction is likely cyclical, not structural
A sharp rupee appreciation could deepen local price declines
Jigar Trivedi of IndusInd Securities sees strong support for MCX gold April contracts near ₹1.50 lakh per 10 grams, while Comex gold has support around $4,900 per ounce.
Investor interest in gold remains strong.
January gold ETF inflows surged to ₹24,039 crore
Inflows more than doubled compared to December
Prices below ₹1.45 lakh have seen strong institutional buying
When prices briefly dipped below ₹1.4 lakh on February 1, they staged a sharp V-shaped recovery, signalling aggressive accumulation at lower levels.
Analysts say gold could see deeper selling only if multiple factors align:
A strong breakout in equities
US dollar index rising decisively above 105–106
Sustained de-escalation in geopolitical tensions
Absent these triggers, gold is likely to consolidate in a broad ₹1.48 lakh to ₹1.60 lakh range.
Most experts recommend a buy-on-dips strategy.
₹1.45–₹1.48 lakh seen as accumulation zone
Waiting exclusively for ₹1.4 lakh may mean missing opportunities
Gold remains an effective long-term hedge
The consensus view: volatility may persist in the short term, but the structural bull case for gold remains intact.
(By arrangement with livemint.com)
