Gold Price Today: Sharp Reversal After Record Rally Sparks Investor Debate
After emerging as one of the most lucrative trades in precious metals over the past two years, gold has experienced a dramatic reversal. Gold prices on the Multi Commodity Exchange (MCX) have plummeted by nearly ₹38,000 from their record highs, leaving investors to ponder whether this decline presents a strategic buying window or warrants increased caution.
Market Sentiment Shifts Amid Dollar Strength and Fed Speculation
Investor enthusiasm toward gold and silver prices has waned significantly due to mounting concerns over a robust US dollar and the potential nomination of inflation hawk Kevin Warsh by former US President Donald Trump as the next Federal Reserve chairperson. This development has injected uncertainty into the precious metals market, triggering a sell-off.
During Friday's trading session, gold prices on MCX crashed by nearly ₹20,000 per 10 grams, settling at ₹1,49,653. By Sunday, prices closed further down at ₹143,000, marking a cumulative fall of ₹37,779 or approximately 21% from the record peak levels. This sharp correction has reignited interest among retail investors, particularly those who missed out during gold's impressive bull run.
Ray Dalio's Persistent Advocacy for Gold Allocation
Market veterans, including billionaire investor Ray Dalio, founder of Bridgewater Associates, have consistently advocated for a 5–15% allocation to gold within a balanced investment portfolio. In December and again at the Davos forum last month, Dalio emphasized that most investors should maintain this exposure to gold or alternative monetary assets.
The 76-year-old investor explained, "We can delve into the pricing dynamics of gold or its potential movements, but I firmly believe holding that percentage is essential. When other portfolio components underperform—due to factors like stagflation or debt crises—gold typically excels."
Dalio has repeatedly expressed concerns over escalating global debt levels, citing this as a key reason for favoring gold holdings. He stated, "There's excessive debt being generated worldwide, not just in the United States but also in the UK, France, China, and numerous other nations. This overproduction of debt makes me wary of traditional currency, leading me to prefer gold as a store of value." This perspective was shared during a recent podcast conversation with Nikhil Kamath.
Analysts Urge Calm and Strategic Portfolio Hedging
Analysts on Dalal Street concur that this is not a moment for panic, emphasizing that gold and silver serve as effective portfolio hedges. They view the recent price crash as a necessary correction following an overheated two-year rally.
Harshal Dasani, Business Head at INVasset PMS, noted, "Precious metals typically move in cyclical patterns. Chasing momentum, especially after vertical price surges, often results in suboptimal entry points." Despite current volatility, analysts maintain a structurally bullish long-term outlook for bullion, supported by record central bank purchases, persistent supply deficits in silver, and ongoing geopolitical tensions.
Dasani added, "Gold, with its relatively lower volatility, continues to act as a portfolio stabilizer, while silver remains a higher-beta asset requiring careful position sizing. Investors should utilize precious metals as strategic hedges rather than short-term trading instruments."
Akshat Garg, Head of Research & Product at Choice Wealth, echoed this sentiment, advising, "Gold and silver are portfolio hedges, not speculative trading bets. If your allocation is sensible, maintaining your position is prudent. Staggered buying during corrections often proves more effective than chasing rallies. Volatility may test emotions, but it shouldn't derail long-term financial plans."
Disclaimer: This article is intended for educational purposes only. The views and recommendations expressed belong to individual analysts or broking firms and not to Mint. Investors are advised to consult certified experts before making any investment decisions.
