Gold Prices Likely To Soften In Near Term; Experts Advise To Book Profit

Experts see gold prices may soften in the near term with the US trying to negotiate a ceasefire deal between Ukraine and Russia. Hence, they suggested investors sell gold and book profit. Investors who are interested in investing in the precious metal are advised to wait.

"My view is that gold has a $300–400 risk premium at the moment. If risks abate and clarity rises about the Ukraine-Russia and Middle East situations, there's a strong possibility of correction," said G. Chandrashekhar, economist, senior editor, and policy commentator. Current levels are unsustainable in Chandrashekhar's view. The gravity of the uncertainty will reduce, but one cannot predict when it will happen.

The US President Donald Trump said that he is going to talk to Russia Tuesday, said Kunal Shah, head of commodities research at Nirmal Bang, and even Russia cannot withstand these ongoing tensions, which have been going on for the last three years. It's definitely taking a toll. Russia would also like to do business as freely as it used to.

A peace talk is imminent. In the near term, most of the positives have been factored into gold prices, which may lead to some correction. It can go down to the level of $2080-2050 if the peace talk materialises, Shah said.

The kind of uncertainty the market is noticing at the moment has started with the Ukraine-Russia conflict three years ago. Then, the Hamas-Israel conflict and high inflation all added to uncertainty. Now, another factor was added, which is tariff outlook uncertainty. All these combined are propelling gold prices higher.

The point is that as the gold prices continued to rise, the risk of price correction is also increasing. Hence, it's a good time to sell gold and book profits. Whatever profit one makes, they can utilise it by investing in current prices, said Chandrashekhar.

According to Shah, corrections on the back of peace talks will be a great opportunity to re-enter a long position in gold. Investors need gold for hedging. Gold will likely continue its safe-haven status, at least for the next three to five years, because there is no easy alternative available that can be seen as a hedge.

Gold is not at $3,000 only because of geopolitical reasons. Problems in the US bond markets and uncertainty regarding the tariff outlook are also contributing to the commodity's gain, Shah said. "I don't think central banks are going to buy US bonds, at least for some more time, until Trump talks in globalisation's favour."

Volumes in the domestic gold market will be impacted because of the higher prices. Indians may shy away from buying gold, according to Kunal Shah, head of commodities research at Nirmal Bang. Nevertheless, in the domestic markets, once the festive and marriage seasons start, the buying will come.