Gold tumbles Rs 12,700/10 gm from peak. Big crash coming or golden opportunity?
Gold prices have fallen nearly Rs 12,700 from their all-time high on the Multi Commodity Exchange (MCX), causing anxiety among investors who had been riding the bullish trend of the yellow metal just weeks ago.
From an all-time high of Rs 1,32,294 per 10 grams, gold has now corrected 9.6% to hover near Rs 1,19,605, a decline of Rs 12,700, leaving many wondering whether this marks the start of a deeper decline or a long-term buying opportunity.
So far, the trend has been choppy, with volatility dominating trade ahead of key global triggers.
Trade deal hopes, Fed stance weigh on bullion
Renisha Chainani, Head – Research at Augmont, explains the broader cues at play:“Gold prices have fallen below $4000 and Silver $47 as bullion’s appeal as a safe-haven was somewhat diminished with indications of an easing of US-China trade tensions, and market players await this week’s Federal Reserve interest rate decision.”
Optimism around a possible trade truce between the US and China has somewhat dulled the shine of gold, traditionally seen as a hedge in uncertain times. According to Chainani, “Top Chinese and US economic officials worked on the terms of a trade agreement on Sunday, which will be decided upon later this week by US President Donald Trump and his Chinese counterpart, Xi Jinping.”
But that’s not the only factor investors are tracking. The Fed’s upcoming rate decision could significantly sway gold’s trajectory.
“If the Fed adopts a dovish stance with this week’s anticipated rate decrease, however, this might be countered,” Chainani adds, highlighting that a lower interest rate environment could once again revive demand for non-yielding assets like gold.
Support levels tested, more volatility ahead
The fall hasn’t been isolated to global markets. Domestic gold futures have also been under pressure. On Tuesday, the MCX December contract settled at Rs 1,19,646 per 10 grams, down 1.08%. Gold briefly dropped to Rs 1,18,450 during the session before recovering partially.
Manoj Kumar Jain of Prithvifinmart Commodity Research notes that while prices tested their recent lows, some technical supports are still holding.
“Gold is holding its make or break level of $3,870 and silver is holding its support level of $46.50 per troy ounce on a closing basis.”
He expects gold to remain volatile this week amid the Fed policy meeting and any developments on the US-China front.
“Gold and silver are expected to trade in the range of $3,870–4,280 per troy ounce and silver in the range of $45.50–51.50 per troy ounce,” he said.
In Indian markets, Jain pegs support for gold at Rs 1,17,000–Rs 1,18,000 and resistance around Rs 1,20,500–Rs 1,21,400 for the week.
If these levels hold, he believes a recovery toward Rs 1,21,500 is possible, while silver could test Rs 1,47,000 in the near term.
Triggers to watch this week
Jateen Trivedi, VP – Research Analyst, Commodity and Currency, LKP Securities, points to a build-up of sentiment ahead of the Fed meet and recent geopolitical cues.
“Gold traded weak by another Rs 2,500 at Rs 1,18,450 per 10 grams as sentiment turned negative following renewed optimism around a possible US-China trade deal.
The focus now shifts to the US Fed’s interest rate decision on Wednesday night, which will guide the next leg of the trend,” he said.
Trivedi outlines the key short-term levels to watch:
“Gold remains under pressure with key support at Rs 1,16,500–Rs 1,18,000, while resistance is seen near Rs 1,21,000–Rs 1,22,000.”
What should investors do now?
At this point, analysts remain cautious, not dismissing the potential for further downside but also pointing to the likelihood of support kicking in near Rs 1,17,000. The dual overhang of macroeconomic uncertainty and technical weakness means traders may see heightened volatility in the coming days.
While some long-term investors may be tempted to view the recent drop as an entry point, analysts are watching the Fed’s language and the US-China summit closely before calling a directional turn.
Until then, prices are expected to remain choppy. As Manoj Jain notes, “Gold and silver are seeing short covering at current levels and long-term investors must hold their long positions.”
Also read: Gold rebounds on bargain hunting ahead of Fed verdict
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)