Gold rate has seen a significant correction over the last few sessions, largely due to profit booking at higher levels. MCX gold April contracts are down nearly 18% from their peak and are witnessing high volatility, raising concerns that the prices may see further correction.
Most experts say it is unlikely that gold prices will lurch sharply lower, as fundamentals such as geopolitical and geoeconomic uncertainties, central bank buying, and US Fed rate cut expectations remain in place.
The People’s Bank of China has accumulated gold for the fifteenth consecutive month.
A Bloomberg report, citing official data on February 7, stated that the People’s Bank of China (PBOC)’s holding of gold surged 40,000 troy ounces in January. This highlights steady central bank buying despite gold’s sharp rally over the last year.
However, gold prices could see a further technical correction of about 10% in the near term due to the improving risk appetite of investors, which can trigger some profit booking in gold and buying in equities.
Anindya Banerjee, the head of commodity and currency research at Kotak Securities, said he is bullish on gold, as the long-term drivers—central-bank accumulation, fiscal expansion, and currency debasement—are still firmly in place.
However, Banerjee was quick to add that gold is not a one-way trade.
“Short-term corrections of around 10% are quite common, especially after sharp rallies, and can be triggered by profit-taking, temporary strength in equities, or shifts in positioning,” said Banerjee.
“In the Indian context, a move toward ₹1.4 lakh per 10 grams would roughly imply a 10% correction, which is possible from a technical standpoint. A significant appreciation in the rupee could also contribute to such a decline in local prices. But in dollar terms, the broader trend remains upward, and any such correction is likely to be cyclical rather than structural,” Banerjee said.
Jigar Trivedi, Senior Research Analyst at IndusInd Securities, said the undertone is likely to remain bullish amid ongoing issues ranging from geopolitical tensions to geoeconomic risks, the US Fed’s policy stance for rate trajectory and safe haven buying.
“The undertone is likely to stay positive. However, the way the yellow metal has appreciated, it’s expected to stay volatile. Comex gold has a strong support near $4,900 per ounce. Likewise, MCX gold April has a floor near ₹1,50,000 per 10 grams,” said Trivedi.
What should investors do?
Experts recommend buying gold on dips as the structural outlook for gold remains robust.
Vandana Bharti, the head of commodities research at SMC Global Securities, highlighted that while a tactical correction cannot be ruled out, a drift in MCX gold toward ₹1.4 lakh is unlikely without a major structural shock in global markets.
“From a strategic perspective, writing off gold’s bull run at this stage would be premature, even as equities attract flows due to improving sentiment around the US-India trade dynamics and stabilising Nifty levels,” said Bharti.
Bharti further explained that MCX Gold is trading near ₹1.57– ₹1.58 lakh per 10 grams currently, and for prices to fall toward ₹1.4 lakh, the market would need to see an additional 10–12% decline from present levels. However, recent price behaviour suggests that the ₹1.40– ₹1.45 lakh zone is a strong area of institutional demand.
In January 2026, monthly net inflows into gold ETFs jumped more than twofold over December to ₹24,039 crore. This underscores sustained retail investor demand for a safe-haven asset.
“This shift in allocation suggests that underlying demand for gold remains firm, which could limit the depth of any sharp correction in prices,” said Bharti.
Bharti further highlighted that when prices briefly slipped below ₹1.4 lakh on February 1, following budget-led volatility, they quickly staged a V-shaped recovery, indicating that large players consider anything below ₹1.45 lakh a deep-value accumulation zone.
Moreover, the idea that geopolitical risks are fading is not fully supported by market signals. US-Iran tensions and broader global uncertainties continue to sustain a risk premium in gold, preventing a complete downside unwind.
Central banks remain consistent buyers of gold as part of their diversification away from the US dollar. This creates a structural demand base that acts as a soft floor for prices, even if retail investors rotate funds into equities in the near term.
According to Bharti, only a strong breakout in equities, a sharp rally in the US dollar index above 105–106, and a sustained de-escalation in global geopolitical tensions can trigger a sharp selloff in gold and drag MCX gold decisively below ₹1.4 lakh per 10 grams.
Until then, gold is likely to consolidate in a broad range between ₹1.48 lakh as support and ₹1.60 lakh as resistance, said Bharti.
Any decline toward ₹1.45– ₹1.48 lakh should be seen as a buying opportunity for long-term hedging rather than a signal of structural weakness, and waiting exclusively for ₹1.4 lakh may result in missing accumulation zones where smart money is already positioning, said Bharti.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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