Gold Prices Correct From Highs Ahead of India's Festive Season

Gold prices have corrected from their recent highs in India, and market participants are now eyeing the festive season for potential demand revival. The domestic gold market has been experiencing a mix of record high levels and conflicting global signals, leaving buyers cautious.

According to Prithviraj Kothari, Managing Director at RiddiSiddhi Bullions and President of India Bullion and Jewellers Association, the recent softness in prices can be attributed to the US Federal Reserve's rate hike. The Fed raised rates by 25 basis points, its first hike in three years, making non-yielding gold less attractive.

Kothari expects the near-term trend to largely depend on the US Federal Reserve's next steps, particularly whether it goes for another rate hike. He also highlighted that the movement of the US dollar and bond yields will remain important, as both generally have an inverse relationship with gold.