Gold Price Retreats From Record Highs: Is It Time To Buy? Experts Weigh In

Gold prices in India crossed Rs 1 lakh per 10 grams this week, marking a historic milestone for the yellow metal. Since Jan. 1, the precious metal has surged more than 25%, driven by safe-haven demand amid uncertainties triggered by US tariffs. The buying spree by central banks also aided the price surge.

The 24 carat gold price stood at Rs 98,240 per 10 grams across major cities in India on Thursday, while the 22 carat gold price marginally dropped to Rs 90,050 per 10 grams. With the Akshaya Tritiya festival approaching, experts and market observers expect a price appreciation with the rise in demand for the yellow metal.

As the precious metal has retreated from its all-time high levels, many investors are wondering whether to buy now or wait. To clear the air, NDTV Profit spoke to three industry experts to gain deep insights into gold price trends, consumer sentiments, and the future outlook.

While gold prices have surged, consumer interest remains strong, especially with the upcoming Akshaya Tritiya festival on April 30, according to Suvankar Sen, chief executive officer and managing director of Senco Gold Ltd. However, high prices are impacting purchase volumes, with customers buying within tighter budgets. 

“We'll see, know, what we have been looking for in the last two weeks. Now, Akshay Tritiya is next week. So that is one of the auspicious seasons that we always have and consumers are keen to buy something. But because of the higher gold prices, consumers are coming...the ticket sizes, or rather the quantity of gold, is something that is getting impacted,” he said.

If gold prices correct slightly, it could revive consumer sentiment, he said. The wedding season, which peaks in May and June, should also support demand. 

Sharing his views on the gold price rush, ace private investor Naresh Kataria noted that the prices have surged too quickly in the short term.

“Gold has run up too fast in the near term. It is 25% above its 200-day moving average. This time, central banks have taken the lead in driving gold prices. So, maybe a breather is due, but the factors driving this, like central banks de-risking from the geopolitical risk of their central bank reserves, I think that’s very much gone,” he explained.

Adding to Kataria’s views, Angel One’s Tejas Shigrekar said that the prices have reached cautious levels. Shigrekar, who is a senior technical analyst of commodity and currency at Angel One, predicted a correction in gold prices based on technical understanding

"Whenever we see the (Rs) 1 lakh-mark, people become cautious. Gold's volatility is high, and it struggles to sustain above that level. Technically, we’re seeing support at around $3,220 and $3,145. A correction seems likely,” he said, advising investors to keep an eye on international cues for further insights.

Rising gold doesn’t compete with equities but complements them, according to Kataria.

“Gold going up is beneficial for India and Indian markets. Indians hold a large stock of gold, almost equal to our GDP. When gold rises, it gives a positive wealth effect to the Indian consumer. Historically, when gold goes up by 25%, small caps tend to provide average returns, making gold's rise positive for markets,” he said.

Cautioning against gold volatility, Kataria said that the yellow metal may face a correction, even though the structural trend remains bullish. While gold investments are a favourable long-term bet, investors should maintain caution on new entries. 

“Gold doesn’t always perform well in the long term. In the 90s and 2001-2011, gold was flat while markets surged. Currently, central banks are de-risking, and there’s a structural move pushing gold higher. However, volatility is inevitable, as seen in past corrections. Long-term trends suggest gold will continue to rise,” he explained.

Gold certainly has a role in one's portfolio, especially with Brent down, interest rates lower, and rising prices of the metal, Kataria said. “This creates a favourable environment for India, offering a wealth effect. While gold is 25% above its 200 DMA and corrections are typical, I would wait for a better entry point for new allocations, but existing allocations should ride the bull run,” he added.

Shigrekar echoed this. “On the technical side, a correction is expected, especially with the psychological barrier at the 1 lakh mark. With international tariffs and interest rate cuts on the horizon, there's potential for a 5-10% correction in gold prices. A 'buy on dips' strategy is recommended as the market stabilises and adjusts.”