Gold prices rebound, rise over ₹1,600 in two days: Is there still a buying opportunity?

After experiencing a sharp correction following Donald Trump's election victory, gold prices are beginning to show signs of recovery. Over the last two trading sessions, gold prices have surged by as much as ₹1,639 per 10 grams. This resurgence is primarily attributed to a pause in the dollar index's relentless rally, which has made the precious metal more appealing to investors.

Current Market Trends

On the Multi Commodity Exchange (MCX), gold prices settled at ₹75,585 per 10 grams in the previous trading session. While trading was closed during the morning session, it is set to resume in the evening. On the international front, COMEX gold gained 0.3 per cent to trade at $2,638.4 per ounce. Spot gold prices hovered near $2,640 per ounce, reflecting a 0.17 per cent increase.

Despite these gains, gold remains over 5.5 per cent below its October-end peak of $2,790.4 per ounce. The correction has brought domestic gold prices down from their early November highs of ₹80,000 per 10 grams in Delhi. Earlier this year, prices had surpassed ₹81,000. As prices approach ₹76,000, many buyers, particularly those planning wedding purchases, are finding this an opportune moment to invest, especially with jewellers offering discounts.

Factors Influencing Gold Prices

Gold prices are shaped by a combination of global and domestic factors. Traditionally, gold serves as a hedge against inflation and market uncertainty, but when global markets stabilise, its demand—and consequently, its price—tends to decline.

The U.S. dollar's strength has been a critical factor in the recent price dip. A strong dollar makes gold more expensive for buyers using other currencies, reducing its global demand. Additionally, the value of the Indian rupee against the dollar plays a significant role in determining domestic gold prices. A stronger rupee typically makes gold more affordable for Indian buyers.

Should You Buy Gold Now?

For Indian buyers, the current correction in gold prices offers a strategic entry point, particularly for those with upcoming wedding-related purchases. The combination of lower prices and discounts from jewellers makes this an opportune time to invest. For investors, the situation calls for a balanced approach. While the current dip offers an attractive buying opportunity, it is crucial to remain mindful of factors such as U.S. interest rate policies, currency movements, and geopolitical tensions, all of which could influence gold prices in the coming months.

According to Colin Shah, MD, Kama Jewellery, gold prices have declined by over 6 per cent in global markets and by 3.7 per cent in domestic markets, presenting a significant buying opportunity for jewellery buyers, particularly during the ongoing wedding season.

Shah explained that rising inflation in the U.S. has dimmed hopes of an interest rate cut by the Federal Reserve, which has pressured gold prices. Typically, gold thrives in a low-interest-rate environment. Further, a strengthening U.S. dollar has added to the downward pressure on prices.

Looking ahead, Shah expects gold prices to stabilise at current levels in the short to medium term. He predicts a recovery to recent highs as geopolitical tensions escalate and central banks, including the Federal Reserve and the Reserve Bank of India (RBI), soften interest rates in the first half of 2025.

Jateen Trivedi, VP Research Analyst, LKP Securities highlighted the role of geopolitical tensions, particularly the ongoing Russia-Ukraine conflict, in driving renewed safe-haven demand for gold. He noted that concerns over nuclear risks have contributed to a surge in gold prices, with COMEX gold gaining $24 to reach $2,635, and MCX prices rising by ₹700.

From a technical perspective, Trivedi identified resistance levels for gold on COMEX at $2,640–2,650 and support at $2,600–2,610. On the MCX, ₹76,100–76,300 is expected to act as strong resistance, while ₹75,000–75,200 serves as a key support zone. Trivedi anticipates continued volatility in gold prices as geopolitical developments unfold, but he believes safe-haven demand will keep prices elevated in the short term.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.