Gold prices have declined by nearly Rs 12,700 from their peak on the Multi Commodity Exchange, leading to concerns among investors who had previously benefitted from the recent bullish trend of the yellow metal. Gold has experienced a correction of 9.6% from its all-time high of Rs 1,32,294 per 10 grams, currently trading around Rs 1,19,605, reflecting a decline of Rs 12,700. This situation prompts speculation about whether it signals the onset of a more significant downturn or presents a long-term buying opportunity. The current trend exhibits significant choppiness, characterized by volatility that prevails in the market as participants await crucial global catalysts. Renisha Chainani elucidates the prevailing factors influencing the market: “Gold prices have fallen below $4000 and Silver $47 as bullion’s appeal as a safe-haven was somewhat diminished with indications of an easing of US-China trade tensions, and market players await this week’s Federal Reserve interest rate decision.”
Optimism regarding a potential trade truce between the US and China has somewhat diminished the appeal of gold, which is typically regarded as a safeguard during periods of uncertainty. Chainani notes that “Top Chinese and US economic officials worked on the terms of a trade agreement on Sunday, which will be decided upon later this week by US President Donald Trump and his Chinese counterpart, Xi Jinping.” However, that is not the sole element that investors are monitoring. The Federal Reserve’s impending interest rate decision has the potential to substantially influence the direction of gold prices. “If the Fed adopts a dovish stance with this week’s anticipated rate decrease, however, this might be countered,” Chainani adds, highlighting that a lower interest rate environment could once again revive demand for non-yielding assets like gold.
The decline has not been confined to international markets. Domestic gold futures are experiencing downward pressure. On Tuesday, the MCX December contract concluded at Rs 1,19,646 per 10 grams, reflecting a decline of 1.08%. Gold experienced a temporary decline to Rs 1,18,450 during the session, followed by a partial recovery. Manoj Kumar Jain observes that although prices have approached their recent lows, certain technical supports remain intact. “Gold is maintaining its critical threshold of $3,870, while silver is sustaining its support level of $46.50 per troy ounce on a closing basis.”
He anticipates that gold will continue to exhibit volatility this week, influenced by the Federal Reserve’s policy meeting and any updates regarding US-China relations. “Gold and silver are anticipated to fluctuate between $3,870 and $4,280 per troy ounce, while silver is projected to range from $45.50 to $51.50 per troy ounce,” he stated. In Indian markets, Jain estimates support for gold at Rs 1,17,000–Rs 1,18,000 and identifies resistance in the range of Rs 1,20,500–Rs 1,21,400 for the week. If these levels hold, a recovery toward Rs 1,21,500 appears feasible, while silver may test Rs 1,47,000 in the near term.