After a sharp rally that took gold to record highs earlier this month, the yellow metal is now taking a breather. Gold December futures are trading around Rs 1.21 lakh per 10 grams, while silver is down to Rs 1.43 lakh per kg on the Multi Commodity Exchange (MCX), falling sharply in the past week.
According to analysts, the dip was both expected and healthy after gold prices shot up from nearly Rs 75,000 to Rs 1.30 lakh in just a few months. A correction of about 10-15% was on the cards, which would bring prices closer to Rs 1.15 lakh per 10 grams.
“After gold prices surged sharply from around Rs 75,000 to over Rs 1.30 lakh, a correction in the market was both expected and necessary,” said Mahendra Luniya, Chairman of Vighnaharta Gold Ltd. “Ideally, this correction should be in the range of 10-15%, which means prices could ease by about Rs 13,000 to Rs 19,500, bringing them closer to Rs 1.15 lakh per 10 grams.”
Despite this pullback, demand for gold remains firm. Industry experts say that even at these elevated levels, buyers have not backed off. Jewellers reported steady footfall through Dussehra and expect renewed buying if prices ease further ahead of Diwali and the wedding season.
Luniya added that investor sentiment toward gold remains strong. “When prices crossed the Rs 1 lakh mark, people realised the worth of investing in gold. Whether it is through jewellery, coins or digital platforms, demand has remained resilient,” he said. “If prices dip slightly from here, gold buying in India is only likely to accelerate further.”
Globally, sentiment has also shifted. The ongoing US government shutdown, now stretching past 27 days, and uncertainty around Donald Trump’s political influence have dented investor confidence.
“These developments are likely to put pressure on the US Federal Reserve to cut interest rates,” said Luniya. “If rates are reduced, gold demand could rise once again. Given these global dynamics, I do not expect gold prices in India to fall below Rs 1.15 lakh per 10 grams.”
At the same time, a stronger US dollar and profit booking after the record rally have contributed to the fall. Analysts say the drop, more than 6% in a single day last week, was the steepest in over a decade.
“A stronger US dollar, declining physical demand in Asia and profit booking at recent highs all contributed to gold prices closing lower for the first time in ten weeks,” said Dr Renisha Chainani, Head of Research at Augmont. “The dramatic reversal is the result of months of speculative positioning linked to worries about fiscal weakness and anticipation of further rate cuts by the Fed. In spite of the sharp fall, gold’s overall outlook remains optimistic.”
Still, the broader view among market watchers is that this is a pause, not a reversal.
Silver has mirrored gold’s trend but with deeper cuts. Prices have corrected by about 9% as traders locked in gains after recent highs. Higher US bond yields and easing supply concerns have also weighed on sentiment.
“Silver’s correction was sharper because profit taking increased after its big rise earlier this month,” Chainani said. “But its long-term fundamentals remain strong, supported by industrial demand from the electric vehicle and solar sectors.”
Technically, gold prices are expected to consolidate between Rs 1.20 lakh and Rs 1.24 lakh per 10 grams in the near term. A breakout on either side could move prices by another 3-4%. For silver, Rs 1.44 lakh per kg remains a strong support zone, while Rs 1.50 lakh is the resistance level to watch.
For retail buyers, . With the wedding season ahead, even a modest dip may be enough to bring shoppers and investors back to the counter.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)