Gold prices have significantly declined in recent weeks. After hitting a record high of ₹99,358 per 10 grams on April 22nd on the Multi Commodity Exchange (MCX), prices have fallen by approximately 7%. Experts believe prices could further dip to ₹88,000 in the near future.
Reasons Behind the Decline
According to a recent Axis Securities report, gold prices are currently testing crucial technical support levels, such as the 50-day moving average, which has historically provided b downside support. However, the risk of a breach below this level—the first since December 2023—has increased.
A major contributing factor is the diminished expectation of interest rate cuts by the US Federal Reserve. This has led to increased government bond yields, reducing the attractiveness of non-yielding gold. Furthermore, easing concerns over global trade wars have also weakened the demand for gold as a safe haven investment.
Axis Securities highlights the period between May 16th and 20th as crucial, with potential for a trend reversal. A support level of $3,136 in the global market is considered significant; a breach could lead to gold falling to $2,875-$2,950, potentially translating to ₹88,000 per 10 grams in the Indian market.
Expert Opinions
Renisha Chennani, Research Head at Augmont, notes that while gold prices have slightly recovered from their intraday lows, volatility persists. She stated, "Demand for safe-haven assets has resurfaced due to weak US economic data and ongoing geopolitical tensions."
However, she also cautioned that a breakdown of the double-top neckline support at $3,200 could lead to further declines in the near term. She anticipates prices reaching $3,000-$3,050, equivalent to ₹87,000-₹88,000 per 10 grams in India. She believes this could present a good buying opportunity for long-term investors.
Augmont's technical analysis indicates current support at ₹92,000 and resistance at ₹94,000 per 10 grams, suggesting a bearish trend within a narrow trading range.
Long-Term Outlook Remains Stable
Prithviraj Kothari, MD of RiddiSiddhi Bullions, believes the long-term fundamental outlook for gold remains b. "Gold has always been a hedge against global uncertainties. While there is temporary pressure, the long-term outlook for investors remains positive," he stated.
However, he also warned that a faster-than-expected global economic recovery could put further pressure on gold. "If risk-off sentiment fades and global growth accelerates, gold could fall further to the $3,000-$3,050 level."
What Should Investors Do?
This period presents both risk and opportunity for investors. Short-term traders should remain cautious and monitor key support levels. For long-term investors, a price drop to ₹88,000 could present a favorable buying opportunity—provided they adopt a diversified and phased investment strategy.
Gold prices are currently at a delicate juncture. The future direction will largely depend on global economic indicators and central bank policies. If prices fall to ₹88,000 per 10 grams, experts consider it an attractive level for long-term buyers. Investors should remain vigilant, monitor support levels, and employ a strategy of staggered investment rather than lump-sum investments.
