Gold drops 26% from January peak is this a Diwali buying opportunity
Gold prices have experienced a sharp correction of over 26% from their January peak of $5,595 per ounce, falling to around $4,136 per ounce. This decline, one of the steepest in recent years, unfolded in stages rather than a single drop. Analysts note that the downturn has made valuations more attractive, with MCX gold now trading below the ₹1.50 lakh mark.
Kaynat Chainwala, AVP - Commodity Research at Kotak Securities, explained that gold initially surrendered most of its January gains before recovering to $4,700 by late August. A subsequent decline saw prices drop to approximately $4,250 by mid-September, driven by firmer-than-expected inflation readings and rising Fed hike expectations.
The recent decline has been primarily influenced by higher US Treasury yields, a stronger dollar, and shifting geopolitical expectations. Despite these headwinds, structural drivers such as central bank buying, fiscal concerns, and geopolitical uncertainty remain intact, according to Tata Mutual Fund.
Experts advise caution ahead of Diwali. Kaveri More, Commodity Technical Analyst at Choice Broking, suggests staggered buying over the next few weeks rather than lump-sum investments. For festive or jewelry purchases, buyers can proceed as needed, while investors may consider Gold ETFs to avoid jewelry-making charges. Support levels are seen around $3,950 per ounce, with potential volatility ahead.