Gold price may fall down to Rs 88k/10 gm. Should you accumulate on dips? Here’s what analysts say

Gold Price Prediction: How Low Will It Go?

Gold and precious metals have been bearing heavy selling pressure lately, being down close to 7% from the record high of Rs 99,358 per 10 grams (hit on April 22, 2024, on MCX). Gold is now testing an important support line, that is, the 50-day moving average, for the first time since December 2023.

The Gold Price is seen by the market to slide further and touch Rs 88,000/10 gm, which raises the question for investors: Does this signal a buying opportunity or will a more serious correction follow?

Let us analyze the major reasons behind the recent decline of gold, expert opinions upon it, and whether to accumulate on dips or stay put until we see a more stable trend.

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Why Are Gold Prices Falling?

1. Stronger US Dollar & Fed Rate Cut Uncertainty
   Gold (priced in USD) behaves inversely to the US dollar. The Dollar Index (DXY) has practically moved along in strength due to warming of chances of:
   >Delayed US Fed rate cuts: Markets now price in only 1-2 rate cuts in 2024, reduced from an earlier 3-4.
   >Higher Treasury Yields: Rising yields on Government securities steer investors away from an asset like gold, which does not pay any interest.
2. Profit Booking After Record Highs
   Prior to this correction, gold price soared over 20% in 2024. Profit booking by institutional investors is weighing down short-term gold prices.
3. Reduced Safe-Haven Demand
   (Stable) Equity markets (Sensex & Nifty are close to their record highs) lower the innate appeal of gold to serve as a hedge.

Eased tensions in the Middle East have accordingly seen geopolitical risk premiums drop.

Gold Price Forecast: How Low Can It Go?
Short-Term Outlook (1-3 Months)
Support at Rs 88,000-90

Should You Buy Gold Now? Analysts on the Matter

“Accumulate in Small Doses” – ICICI Securities
“Buy between Rs 88,000-90,000 levels for long-term gains.”
Target: Rs 1,05,000 by December 2024.

“Wait for More Clarity” – Kotak Securities
“If Fed delays rate cuts beyond September, gold may drop further.”

Next Key Support: Rs 85,000 if Rs 88,000 breaks.

“Hedge with SIPs in Gold ETFs” – HDFC Securities
“Systematic investment in gold ETFs/Sovereign Gold Bonds (SGBs) reduces timing risk.”

Best Strategies for Gold Investors

1. Physical Gold Buyers

• Wait for Rs 88,000-90,000 before making bulk purchases (wedding/festive demand).
• Check local premiums – Jewellers may charge extra due to rupee volatility.

2. Gold ETF & Sovereign Gold Bond (SGB) Investors

• Start SIPs to average out costs.
• SGBs offer 2.5% annual interest + tax-free maturity after 8 years.

3. Traders (Futures & Options)

• Short-term traders: Wait for a clear breakout below Rs 90,000.
• Options strategy: Sell Rs 92,000 Call + Buy Rs 88,000 Put for downside protection.

Key Risks to Watch:

1. Fed Policy Shift – Hawkish signals could push gold lower.
2. Rupee Depreciation – A weaker INR may limit MCX gold’s fall.
3. Global Recession Fears – If stock markets crash, gold could rebound sharply.

Final Verdict: Buy, Hold, or Wait?

• Short-term traders: Wait for Rs 88,000-90,000 support test.
• Long-term investors: Start staggered buying (25% now, 25% at Rs 88,000).
• Jewellery buyers: Delay non-urgent purchases by 2-3 weeks.

What’s your gold strategy?

• Buying the dip?
• Waiting for Rs 85,000?
• Switching to SGBs/ETFs?

Frequently Asked Questions

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