With the festive buying season on, gold continues to hold its ground in the domestic market. Retail prices of 24-carat gold are currently hovering around Rs 1,44,570 per 10 grams.
Although prices have eased from their previous highs, the precious metal remains significantly more expensive than it was a year ago. At Rs 1,30,860 on Dhanteras last year, gold has registered a year-on-year increase of nearly 7% to 8%, offering investors a positive return despite fluctuations in the broader market.
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The Peak And Subsequent Correction
Gold's recent retreat comes after an exceptional run-up in prices earlier this year. International spot rates climbed to a historic $5,589 per ounce on Jan. 28, 2026, taking domestic prices beyond the Rs 1.8 lakh mark for 10 grams.
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Since then, the metal has witnessed a correction of close to 30% from its record level. Analysts point to the unwinding of leveraged positions as a key factor behind the downturn. Expectations of tighter US monetary policy, following a change in Federal Reserve leadership, further weighed on sentiment. The CME's decision to raise margin requirements also contributed to the sharp adjustment.
Market analysts do not see the recent decline as evidence that gold's broader upward trend has run its course. Instead, they regard the correction as a necessary adjustment, driven by the unwinding of leveraged positions in an otherwise bullish market.
Speculative Froth Purged
According to Monarch Networth Capital's Dhruv Joglekar, the recent correction has helped remove excessive speculative positions from the gold market without weakening the economic factors underpinning its longer-term prospects.
Even after the decline, gold continues to offer a degree of capital protection in a year marked by considerable market volatility. The brokerage's proprietary valuation model, which compares the global stock of above-ground gold with the money supply of reserve currencies, estimates the metal's fair value at between $3,248 and $4,595 an ounce. The model places the central estimate at $3,922.
Despite the sharp sell-off, gold found support at around $3,870 an ounce in October, a level that remained within the projected valuation range. Asset managers view the decline as a necessary adjustment that has reduced the gap between market prices and underlying fundamentals.
Outlook For Long-Term Investors
The recent decline could offer long-term investors an opportunity to increase their exposure to gold. Gold's underlying investment appeal remains intact, with persistent macroeconomic uncertainties reinforcing its position as a preferred store of value.
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