After a record-breaking nine-week rally, gold prices in India have finally taken a breather. The relentless upward momentum that drove prices to historic highs has reversed sharply this week, signaling the first major correction in months.
On the Multi Commodity Exchange (MCX), December gold futures which had recently touched near-record levels of around ₹1,31,000 per 10 grams, dropped steeply. During intraday trade, prices fell by over ₹1,600, hovering between ₹1,23,222 and ₹1,23,500 per 10 grams.
This sudden slide has raised a big question for Indian investors and consumers alike: Is this just a short-term dip, or the end of the gold rally?
Why Have Gold Prices Fallen in India?
The recent drop in gold prices is closely tied to both global trends and local market dynamics.
1. Profit-Booking After a Long Rally
After nine consecutive weeks of strong gains, the market became ripe for profit-taking. Many traders and institutional investors who bought gold at lower levels are now locking in profits, triggering a natural correction.
2. Stronger U.S. Dollar
Globally, the U.S. dollar has gained strength. Since gold is priced in dollars, a stronger dollar usually pushes international gold prices lower. This global weakness has also spilled over into Indian markets, overshadowing the rupee’s impact.
3. Post-Festive Season Slowdown
The recent surge in Indian gold prices was supported by heavy festive demand. With major festivals now behind us, buying activity has cooled. According to Jateen Trivedi, Analyst at LKP Securities, this “post-festive profit booking” is a normal market reaction.
4. Reduced Safe-Haven Demand
Gold’s recent strength was driven by geopolitical tensions and global uncertainty. However, improving sentiment around the U.S.-China trade talks has prompted some investors to shift funds from gold to riskier assets like equities.
What Experts Are Saying
Market experts are advising caution in the near term.
- Abhilash Koikkara of Nuvama Professional Clients Group noted that MCX gold is witnessing “significant profit booking,” adding that the short-term outlook appears slightly bearish, with prices likely to test the ₹1,24,000 mark.
- Analysts at Nirmal Bang have also recommended a “sell on rise” approach, with possible downside targets between ₹1,23,000 and ₹1,24,000.
- Jateen Trivedi of LKP Securities believes the market will stay subdued unless prices manage to reclaim and hold above the ₹1,24,000 resistance level.
🇮🇳 What Lies Ahead for Indian Gold Investors?
For now, the Indian gold market seems to be in a consolidation phase. While the long-term outlook for gold remains positive, thanks to inflation worries, global uncertainties, and strong central bank demand, the short-term trend may stay volatile.
Market watchers suggest keeping an eye on upcoming global cues, especially the U.S. Consumer Price Index (CPI) data and the Federal Reserve’s next interest rate decision. These events will heavily influence the U.S. dollar’s movement and, consequently, gold’s direction on the MCX.
For long-term investors, this pullback could present an opportunity to accumulate at lower levels. However, short-term traders should remain cautious, as further fluctuations are likely in the coming weeks.
