Gold’s shine fades: Below ₹1.2 lakh after a 10% weekly plunge, signalling caution and consolidation ahead

Gold prices in Ahmedabad declined sharply, with the spot rate on the Multi Commodity Exchange (MCX) dropping from ₹1.32 lakh per 10 grams to ₹1.19 lakh, a decrease of ₹13000, or nearly 10%.

Rahul Kalantri, VP Commodities, Mehta Equities Ltd., said, "Gold prices closed mixed on Tuesday. The session began with continued selling pressure from Monday’s sharp decline, pushing both metals to three-week lows. Later in the day, gold recovered about half of its earlier losses. The recovery was supported by short covering, corrective buying, and a softer dollar index, as U.S. 10-year bond yields slipped below 4%."

Although gold has risen this year, today’s decline shows that it is wiser to be cautious than to buy without restraint.

"With the recent relaxation of global trade tensions and the resulting drop in safe-haven interest, the price of Indian 24-carat gold at ₹118,043 per 10 grams is reflecting the turnaround in investor sentiment," said Aksha Kamboj, Vice President, India Bullion & Jewellers Association (IBJA) and Executive Chairperson, Aspect Global Ventures.

Dr. Renisha Chainani, Head - Research at Augmont, said, "After setting a record high of $4398 last week, gold has dropped more than 12% to $3901 globally. This seven-day correction has put an end to one of the longest bull runs in the history of the precious metal."

The Fed monetary policy meeting started on Tuesday and will conclude later today. As expected, the U.S. Fed could cut interest rates by 25 basis points to boost the U.S. job market. Fed rate cut hopes supported gold and silver prices at lower levels. With markets already factoring in another rate cut in December, traders are waiting for Fed Chair Jerome Powell to give them clues about the direction of monetary policy going forward.

Investors, however, kept an eye on developments on a possible trade deal between the US and China that would further reduce demand for safe havens. A framework deal between Chinese President Xi Jinping and US President Donald Trump is anticipated to be finalised. The pact aims to loosen China's restrictions on rare-earth shipments and prevent further US tariff increases.

"Investment-wise, this change indicates that although gold remains a good portfolio hedge, the short-term trend is down, and investors should not try to catch up with recent highs. As global projections are revised downward, we view the current phase as more of a consolidation than a new climb," said Kamboj.