Gold Tumbles 26% from January Peak: Is Now the Perfect Time to Buy Before Diwali?

Gold prices have experienced a notable correction of over 26% from their January peak of $5,595 per ounce, now settling around $4,136 per ounce. This decline, one of the sharpest in recent times, has unfolded in stages rather than a continuous drop. Analysts highlight that despite the recent downturn, the valuations are becoming increasingly attractive, especially with MCX gold trading below the ₹1.50 lakh mark.

The primary factors behind this recent price movement include rising US Treasury yields, a strengthening dollar, and shifting geopolitical expectations, all of which have put downward pressure on gold prices. Additionally, movements in the Indian rupee are also impacting domestic pricing dynamics. Analysts suggest that while these headwinds are significant, the structural drivers that previously supported gold prices—such as strong central bank buying, fiscal uncertainties, and geopolitical instability—remain intact, hinting at a potentially resilient medium-term outlook for the metal.

In the short term, the outlook for traders and investors is one of cautious optimism. Analysts recommend a phased approach to buying, particularly as seasonal demand increases ahead of Diwali. There is advice against attempting to time the market for the lowest price; instead, staggered purchasing over the coming weeks is suggested. Current price levels provide a more attractive entry point for newcomers, although volatility may persist, with support anticipated around $3,950 per ounce. Maintaining a sensible allocation to gold is advised, especially given the ongoing macroeconomic uncertainties.

Source: Market Source

(Expert Note: This report was independently prepared by the Wealthova Commodities team.)