Gold prices have taken a sharp tumble, losing over ₹13,000 from their record highs as investors turn cautious ahead of the crucial US Federal Reserve policy announcement on Wednesday. On Tuesday, MCX gold futures slipped below ₹1,20,000 per 10 grams, reflecting fading euphoria that had driven the yellow metal’s rally over the past several months.
Market sentiment turned risk-off as optimism grew around a potential US-China trade deal, prompting investors to book profits after a strong run. Rising bond yields and easing geopolitical tensions have also weakened gold’s short-term appeal.
“With bond yields on the rise and reduced geopolitical tensions, gold’s short-term attractiveness has softened, leading to some profit-taking after recent highs,” said Ross Maxwell, Global Strategy Lead at VT Markets.
Fed Policy Decision in Focus
All eyes are now on the US Federal Reserve, which is widely expected to announce a 25 basis points rate cut on Wednesday. Lower interest rates typically benefit non-yielding assets like gold, making bullion more attractive to investors seeking safety and long-term value.
If the Fed adopts a dovish stance or hints at further policy easing, analysts believe gold could regain its upward momentum.
“A softer policy outlook from the Fed could revive gold’s momentum,” said Maxwell. “Gold continues to serve as a hedge against inflation and a safe store of value during uncertain times.”
Analysts Maintain ‘Buy-on-Dips’ View
Despite the recent correction, market experts remain bullish on gold’s long-term potential. Manav Modi, Analyst – Precious Metals Research at Motilal Oswal Financial Services, said the dip offers a strategic entry point for investors.
“While trade optimism may pressure prices in the near term, expectations of a Fed rate cut should lend support. This correction provides an opportunity to accumulate gold positions,” Modi said.
He, however, cautioned investors to wait for prices to stabilize before entering the market. “Buy-on-dips stance continues, but some more room on the lower end looks likely,” he added.
Why Gold Still Shines Long Term
Even after the recent slide, gold remains among the best-performing asset classes of the year, up nearly 50% year-to-date. The rally has been driven by strong central bank purchases, persistent fiscal deficit worries, and global currency volatility.
For long-term investors, gold still holds its place as a core diversification and wealth preservation asset. Experts suggest that those looking to hedge against inflation or market turbulence should continue viewing gold as a stable component of their portfolio.
“Long-term investors can use this dip to accumulate gold,” Maxwell noted. “It remains a cornerstone for portfolio diversification and financial resilience.”
Key Takeaways
- MCX gold prices have dropped over ₹13,000 from record highs.
- The US Fed rate decision on Wednesday will be crucial for gold’s next move.
- Analysts expect a 25 bps rate cut, which could support bullion prices.
- Experts advise a ‘buy on dips’ strategy with cautious entry points.
- Gold remains a reliable hedge against inflation and economic uncertainty.
Summary
Gold’s sharp correction has sparked a debate among investors: is this a time to worry or an opportunity to buy? With the US Fed expected to cut rates and maintain a dovish outlook, experts see potential for a rebound in gold prices once policy clarity emerges. For now, patient investors may find this dip an ideal moment to gradually build their holdings — but only after markets settle post-Fed announcement.
Disclaimer:
This article is for informational purposes only. The opinions expressed are those of market analysts and do not constitute investment advice. Investors should consult certified financial advisors before making investment decisions.