Gold Prices Drop: Is It Time to Buy?

Now, Gold prices saw a slight drop on August 12 as traders booked profits and investors waited for key inflation data from India and the US. On the MCX, October gold contracts slipped 0.07% to Rs 1,00,250 per 10 grams, while silver bound up 0.24% to Rs 1,13,572 per kg.

Several Factors Lead to the Drop in Gold Prices

The dip comes after many months of record highs for gold, due to inflation concerns, global stress and strong investor demand. Now, several factors could push prices down further in the short term.

• Cooling inflation
  

  India’s July inflation rate is expected to slow to 1.4% from 2.10% in June. In the US, inflation may rise slightly to 2.8%, still near the Federal Reserve’s 2% target. Gold often rises when inflation is high and slips when inflation cools, so softer numbers could put downward pressure on prices.

• Geopolitical developments
  

  Speculation is spreading that the Russia–Ukraine war could move toward resolution, with US President Donald Trump and Russian President Vladimir Putin set to meet in Alaska on August 15. Reduced geopolitical stress typically lowers the appeal of gold as a “safe-haven” asset.

• Investor sentiment
  

  Lower inflation and easing tensions mean less demand for gold as a hedge. If that is considered, then prices fall further, creating a buying opportunity for long-term investors.

• Expert view
  

  Expert Manoj Kumar Jain of Prithvifinmart Commodity Research suggests "buying gold around Rs 1,00,100 with a stop loss of Rs 99,660, targeting Rs 1,00,750. He sees support for MCX gold at Rs 99,900-99,475 and resistance at Rs 1,00,650-1,01,100".
  
  Mr. Rahul Kalantri of Mehta Equities gives similar advice, he said "noting support at Rs 99,850-99,450 and resistance at Rs 1,00,750-1,00,980".

Many factors, including inflation trends, geopolitical events and market sentiment, influence gold’s price. While short-term drops may present opportunities to buy, is it the right time to buy. If you are considering investing, watch inflation data, global news and support/resistance levels closely.