“Gold has peaked out”, says Quant Mutual Fund. Warns of 12–15% correction ahead

Gold may be headed for a near-term correction of 12–15% in dollar terms over the next two months, according to a note by Quant Mutual Fund, which cautioned investors that the yellow metal may have “peaked out” in the short term.

In its outlook, Quant Mutual Fund noted, “Gold has peaked out and has the potential to correct by 12-15% in dollar terms over the next two months.”

The fund house’s warning comes at a time when gold prices have been trading near their high amid geopolitical tensions and central bank rate moves.

The firm, however, maintained a constructive medium-to-long-term stance on precious metals, stating, “Our medium-term and long-term views are equally constructive and we reiterate that a meaningful percentage of your portfolio should be dedicated towards precious metals.”

The commentary comes amid growing divergence in the performance of gold and silver.

Quant Mutual Fund’s outlook also adds context to broader commodity sentiment. While the fund expects a sharp short-term correction in gold, it continues to advise investors to hold exposure to precious metals over the longer term. This aligns with its broader strategy, which emphasises cyclical awareness and liquidity trends.The fund house did not elaborate on specific technical or macroeconomic triggers for the anticipated correction, but the warning stands in contrast to bullish narratives that have fueled the gold rally in recent months. Additionally, in a recent conversation on ET Now, Sandip Sabharwal of asksandipsabharwal.com said, “The story for gold has been more compelling because it is a play on global uncertainties and the monetary policy dysfunctionality.”

However, he also acknowledged a shift in silver’s momentum, pointing out the historical correlation between gold and silver.

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“There always used to be a correlation between gold and silver, which broke out,” Sabharwal said, adding that if the correlation returns, silver could outperform, given that it might have been underinvested by institutions.

With rising real interest rates, a stable dollar, and ebbing inflation fears, some strategists have recently tempered their enthusiasm toward gold, especially after the sharp run-up.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)