Gold Prices Retreat from Record Highs: Should You Consider Buying Now?
Tuesday, May 20th 2025
After a stunning rally to new peaks, gold prices have pulled back sharply, leading many investors to wonder: is this the right moment to buy?
Sharp Reversal After Historic Highs
Gold prices on the Multi Commodity Exchange (MCX) recently surged to a record ₹99,358 per 10 grams, but the celebration was short-lived. By Friday, gold had fallen back to just over ₹95,000 per 10 grams, marking a steep retracement of ₹4,300 from Tuesday’s high.
The international gold market mirrored this sharp sell-off. Spot gold saw a dramatic $100 plunge in a single session midweek, eventually closing at $3,298.20 per ounce—over $200 below its all-time high. COMEX gold futures also finished lower at $3,318 per troy ounce.
Why Is Gold Under Pressure?
Several key factors have contributed to gold’s recent slide:
- Rebounding US Dollar: The US Dollar Index, which had dipped below 98, staged a recovery as optimism grew around US-China trade negotiations. A stronger dollar typically weighs on gold prices.
- Easing Trade War Tensions: Hopes for a thaw between the US and China intensified after reports surfaced that Washington might slash tariffs and China showed flexibility by cutting tariffs on select American goods.
Commodity analyst Jateen Trivedi from LKP Securities pointed out that China’s softened approach is seen as a significant driver behind gold’s decline. “Expectations of de-escalation in the trade war have reduced the safe-haven appeal of gold,” he said.
Adding to this, Sugandha Sachdeva of SS WealthStreet emphasized that risk appetite has returned among investors. “With tariff reductions on the table and the dollar bouncing back, investors are shifting away from traditional safe havens like gold and toward riskier assets,” she explained.
Buying Opportunity or More Pain Ahead?
Given the sudden drop, investors are questioning whether now is the time to enter the gold market.
Jateen Trivedi cautions that buyers should remain alert: if the $3,300 support level on COMEX is breached decisively early next week, gold could face further pressure. He notes that news on trade talks will remain a key driver of volatility.
On the domestic front, Sugandha Sachdeva sees potential for renewed interest as Akshaya Tritiya approaches on April 30, traditionally a strong season for gold buying in India. She identifies ₹93,500 per 10 grams as an immediate support level, with deeper support near ₹89,500 if the correction continues.
However, on the upside, gold faces a tough resistance zone between ₹99,500 and ₹1,00,000 per 10 grams. Given the softer trade narrative, Sugandha believes a breakout beyond this range in the near term looks unlikely.
Key Events to Watch
Looking ahead, the next major catalysts for gold prices will come from the economic calendar. Investors are bracing for key US data releases, including:
- Q1 GDP growth figures
- PCE inflation data
- April non-farm payroll numbers
According to Sugandha, these indicators could either reinforce the risk-on mood—keeping gold capped—or reignite safe-haven buying if economic signals disappoint.
Conclusion: Patience Is Key
For now, gold appears to be entering a consolidation phase. While upcoming festivals and traditional demand might cushion prices at lower levels, any aggressive upside may need fresh catalysts, especially from the evolving US-China relationship and critical US economic data.
If you’re considering investing, keep an eye on support zones and be ready to act if new risks emerge.
Comments are closed here.