Gold prices fall nearly 9% from record high, experts predict support levels

New Delhi (The Uttam Hindu): International gold prices saw a modest recovery on Monday, ending a six-day losing streak, although they remain approximately 9% below their recent highs. Domestic gold prices followed a similar trend. At the time of reporting, international gold was trading at USD 2,597 per ounce, recovering from a recent low of USD 2,537 per ounce but still well below its peak of USD 2,790 per ounce. In India, on the Multi Commodity Exchange (MCX), gold was priced at Rs 74,657 per 10 grams, up 1% for the day but down from its earlier high of Rs 80,000 per 10 grams.

According to Kedia Advisory in Mumbai, despite the intraday recovery, the outlook remains cautious due to expectations of fewer US Federal Reserve rate cuts and high US bond yields, which are limiting further upward movement. "The recent pullback has stalled near key technical levels, with USD 2,536 acting as crucial support," Kedia Advisory noted. While geopolitical tensions, including ongoing conflicts in Ukraine and Gaza, have spurred demand for safe-haven assets like gold, robust US economic data and a hawkish Fed stance have weighed on the bullish sentiment. Kedia Advisory stated that a sustained buying push above USD 2,600 is necessary to signal a bullish reversal.

Gold has risen over 24% this year, supported by the US Fed's easing cycle, central bank purchases, and increased demand for safe-haven assets amid global geopolitical and economic risks. Despite the recent pullback, Nirmal Bang brokerage reported that gold is on track for its worst week since June 2021, with a loss of more than 4% for the week. The decline is attributed to a reduction in market expectations for a Federal Reserve interest rate cut next month.

Colin Shah, MD of Kama Jewelry, believes the price correction provides relief to Indian buyers, especially as the wedding season drives significant gold demand. "Gold prices are falling largely due to rising inflation in the US, which has reduced expectations of a rate cut by the US Fed," Shah explained. Looking ahead, Shah predicted that gold prices are likely to remain at current levels in the short-to-medium term but may eventually recover to recent highs as geopolitical tensions ease and interest rates soften, potentially in the first half of 2025.