Gold prices have shown a slight rebound after a significant sell-off, but lingering uncertainties around US interest rates, inflation, and geopolitical tensions continue to weigh on the metal ahead of the Dhanteras festival. On October 26, gold futures on the Multi Commodity Exchange (MCX) for December 4 delivery were trading at ₹1.42 lakh per 10 grams, up 0.39%. Internationally, spot gold rose 0.4% to $4,010.51 per ounce, following a 4% drop last week, the steepest weekly decline since June.
The pressure on gold prices stems from a stronger US dollar, higher Treasury yields, and shifting expectations around US monetary policy. Manav Modi, a commodities analyst at Motilal Oswal Financial Services, noted that elevated energy prices have fueled inflation concerns, limiting the Federal Reserve's flexibility. Anand K Rathi, co-founder of MIRA Money, highlighted competition from dollar-denominated assets offering yields of around 5-5.1%, which reduces gold's appeal until there is clearer guidance on the dollar and Treasury yields.
Despite these challenges, gold remains supported by geopolitical uncertainty and its role as a portfolio diversifier. Festive and wedding demand in India is providing some resilience, though high prices are affecting affordability. Darshan Desai, CEO of Aspect Bullion & Refinery, observed that seasonal demand is supporting domestic buying, but consumers are becoming more cautious. The World Gold Council reported improved retail footfall and retailer orders, with jewellers focusing on lightweight designs and old-gold exchange options.
For investors considering gold exchange-traded funds (ETFs), the recent correction presents both opportunities and risks. Indian gold ETFs saw approximately ₹4,450 crore in net inflows in September, the highest in seven months, according to the World Gold Council. Nirpendra Yadav, a senior research analyst at Bonanza, advised against panic selling or large lump-sum purchases amid volatility, suggesting staggered investments through ETFs. Rathi recommended keeping gold allocations between 5-10% of a portfolio, depending on individual circumstances.