Gold prices: The euphoria that had gripped gold over the last 10 months seems to be fading amid growing risk-off sentiment among investors globally. MCX gold prices have declined over ₹13,000 from all-time high levels to slip below ₹1,20,000 per gram in Tuesday’s trade.
Optimism over a US-China trade deal has dented the demand for precious metals. Moreover, profit-taking at higher levels is another factor derailing the gold price rally.
“With bond yields on the rise and reduced geopolitical tensions, gold’s short-term appeal has softened to give way to some profit-taking after the highs,” said Ross Maxwell, Global Strategy Lead at VT Markets.
Despite this, gold remains one of the best-performing asset classes this year, still up 50% supported by strong central bank purchases, persistent concerns over fiscal deficits, currency risks and overall uncertainty.
Now, with the US Federal Reserve outcome tomorrow, investors are curious if they should use this opportunity to buy the dip in gold.
The US Fed is widely expected to slash rates tomorrow by 25 basis points. Lower rates typically benefit non-interest-yielding assets like bullion.
Should you buy gold ahead of Fed outcome?
Analysts remain confident of gold’s bull run despite short-term glitches, as the fundamental outlook remains strong.
The ability of gold to retain wealth during market turbulence and act as a hedge against inflation continues to make it attractive for those seeking stability in their investments, said Maxwell.
He believes that if the Fed gives a dovish view or any signal of further policy easing, then gold might regain upward momentum. Therefore, investors will keenly watch out for forward-looking commentary from US Fed chair Jerome Powell tomorrow.
Echoing similar views, Manav Modi, Analyst – Precious Metal -Research, Motilal Oswal Financial Services, said that while trade optimism may continue to pressure prices in the short term, expectations of a Fed rate cut could lend support.
“Market participants are expecting a 25bps rate cut. This week’s policy meeting is amidst more than a 20-day shutdown; hence, comments from Governor Powell could provide further clarity and direction regarding the monetary policy ahead and overall economic health,” Modi added.
For investors, this dip may present an opportunity to accumulate positions, balancing near-term volatility against gold’s enduring role as a hedge in uncertain times, he added.
“Buy on dips stance continues. However, more room on the lower end looks likely. Hence, market participants should wait for prices to stabilise before taking a buying position,” he added.
Maxwell, too, said that long-term investors could view this dip as an opportunity to accumulate gold, thereby maintaining its role as a cornerstone for portfolio diversification and wealth preservation.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
