Gold prices in India have fallen by about 3 per cent after Diwali, trading around Rs 1,28,000 per 10 grams. Experts say the decline is a short-term correction caused by profit-booking and market adjustments, not a long-term downtrend.
The Indian gold market has seen a sharp correction after the festive season. Just days ago, gold reached its all-time high of Rs 1,32,000 per 10 grams, but it is now trading around Rs 1,28,000 per 10 grams – a decline of nearly Rs 4,000 or 3 per cent. This sudden drop has surprised both investors and buyers, raising questions about whether it is a good time to buy or if the decline will continue further. Financial expert and Fiscal Forum founder Arihant Mehta advised that there is no need to panic and urged investors to make informed decisions.
Why did gold prices fall?
Arihant Mehta explained that global gold prices fell by over 5 per cent on Tuesday, marking the largest single-day decline in five years. According to reports, spot gold dropped from $4,381 per ounce to $4,109.19. Mehta added that this decline is not a sign of a major crisis but a result of profit-booking and market correction. “When an asset rises continuously, investors naturally start taking profits, which is what happened with gold after nearly 60 per cent returns over the year,” he added.
Short-term correction or long-term decline?
According to Mehta, the current fall is a short-term correction, not the start of a long-term downtrend. Gold had shown rapid gains in recent months, reaching high valuations. A slight cooldown in prices is natural. As long as there is no major global economic or geopolitical disruption, this fall is expected to be temporary.
Factors behind the price drop
Several global and domestic factors have influenced gold prices:
- Strong US dollar: The dollar index has strengthened, weakening gold.
- Rising bond yields: Higher US bond yields make interest-bearing instruments more attractive, pulling money out of gold.
- Reduced geopolitical tensions: Stability in recent global conflicts has lowered safe-haven demand.
- Strengthening rupee: A stronger rupee against the dollar has made imported gold cheaper.
- Profit booking: Traders and funds are taking profits after significant gains.
Expert advice: Should investors buy now?
Arihant Mehta suggested that this dip may be a good opportunity for gradual buying. He also advised against investing all funds at once and recommends using SIP in Gold ETFs or digital gold. Monthly investments help average the purchase price and allow investors to buy more gold if prices fall further. Regarding future highs, Mehta said that short-term gold prices may hover between Rs 1,18,000 and Rs 1,25,000 per 10 grams, but medium-term recovery is expected. If the US Federal Reserve cuts interest rates or global tensions rise, gold could reach new heights again. Long-term investors should remain calm, as gold is a stable asset rather than a quick-profit option.
Advice for retail investors
For those already invested in Gold ETFs or digital gold, Mehta recommended holding positions. Selling in panic during the dip can cause losses. Investors with liquid funds can slowly buy more to take advantage of the decline. Physical gold should primarily be used for jewelry purposes, while Sovereign Gold Bonds (SGBs) and Gold ETFs are safer, interest-bearing and tax-friendly options.
Portfolio allocation recommendation
Mehta advised that every investor should allocate 10-15 per cent of their portfolio to gold. It provides balance during market volatility and compensates for potential losses in other assets.
Disclaimer: This news is for information only. Make sure to consult your financial advisor before investing.
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