Gold prices in India witnessed a significant correction over the weekend, retreating from record highs as the Indian Rupee flexed its muscles against the US Dollar. This movement has prompted investors to reassess their strategies ahead of the festive season.
What Triggered the Sharp Decline in Gold Prices?
The primary driver behind the recent sell-off in domestic gold was the strength of the Indian Rupee. After hitting a record low of 91.07, the INR reversed course, finishing at 89.59 against the US Dollar after three consecutive sessions of gains last weekend. This appreciation made dollar-denominated commodities like gold less expensive in rupee terms, capping upside momentum.
Jateen Trivedi, VP Research Analyst at LKP Securities, highlighted this dynamic, noting that domestic MCX gold remained under pressure around ₹1,33,850, slipping nearly 0.45%, as rupee strength played a crucial role. On the Multi Commodity Exchange (MCX), the gold price fell from its historic peak of ₹1,35,199 per 10 grams to finish at ₹1,34,206, marking a loss of approximately ₹1,000 over three straight sessions.
Anuj Gupta, Director of Ya Wealth, pointed to a domestic trigger for the drag on both gold and silver. He also linked the Rupee's sharp rise to the Bank of Japan's decision to hike interest rates, a move expected to pressure the US Dollar. "The market is discounting this by booking profits from the recent gold and silver price rally," Gupta explained.
Expert Outlook: Is the Bull Run Still Intact?
Despite the recent dip, market analysts maintain a bullish medium-term view for both precious metals, advising investors to see any major correction as a potential buying opportunity.
Global and Domestic Gold Price Forecast
On the international front, Ponmudi R, CEO of Enrich Money, stated that COMEX gold is consolidating near $4,368 per ounce, holding firmly above the key $4,300-$4,330 support zone. "A sustained close above $4,400 could pave the way toward $4,500," he said, citing geopolitical uncertainty and central bank demand as tailwinds.
For MCX Gold, Ponmudi observed consolidation in the ₹1,33,400 to ₹1,35,300 range. He identified critical support between ₹1,33,000 and ₹1,31,500. A decisive breakout above ₹1,34,500-₹1,35,000 could, according to his analysis, accelerate a move towards ₹1,37,000 to ₹1,40,000.
Anuj Gupta echoed the bullish stance, suggesting the overall trend remains positive. He advised that any significant dip should be considered a buying opportunity as long as MCX gold stays above ₹1,32,000.
Silver Rate Projections
The outlook for silver is similarly constructive. COMEX silver eased to around $67.4 per ounce after scaling new highs, but its broader upward channel is considered intact due to tight supply and robust industrial demand. Ponmudi sees near-term support at $64.7–$62.0, with upside potential toward $70–$75.
Domestically, MCX Silver continues to trade near lifetime highs above ₹2,08,437 per kg. The ₹2,05,000 to ₹2,00,000 zone is deemed critical for support. "Holding above ₹2,00,000 keeps the long-term bullish structure intact," Ponmudi affirmed, with resistance seen at ₹2,10,000 to ₹2,15,000.
Key Takeaways for Investors
The recent price action underscores the direct impact of currency fluctuations on commodity markets. The strengthening Rupee provided a natural correction to overheated gold prices. However, the consensus among experts is that the foundational drivers for gold and silver—including safe-haven demand, geopolitical risks, and central bank buying—remain strong.
Investors are thus counseled to monitor the identified support levels closely. The dip, while sharp, is viewed within the context of a ongoing bullish trend rather than a reversal, setting the stage for potential entry points for those looking to build or increase their exposure to precious metals.
