Gold, long‑viewed as a safe‑haven asset, has entered a pronounced correction after a record‑breaking rally that stretched from 2025 into early 2026. International spot prices have retreated 26% from the all‑time high of $5,595 recorded on January 29 of this year, while Indian gold, which mirrored the global move, is down roughly 23% from the same peak.
On the domestic front, the MCX futures contract surged to Rs 1,64,773 per 10 grams in the last week of August, only to slip more than 10% to a low of Rs 1,45,991 per 10 grams the following week. Spot gold in the United States closed around $4,130 per ounce after pulling back from an August high of $4,698. With the metal testing fresh support zones, investors are asking how far the correction could extend.
Factors behind the recent slide
Analysts point to a confluence of macro‑economic and geopolitical triggers. The first wave of decline was sparked by profit‑taking at elevated price levels. Before the market could stabilise, a sudden escalation of US‑Iran tensions pushed crude oil above $120 a barrel, reviving inflation concerns and adding pressure on gold.
More recently, the United States Federal Reserve has shifted from a rate‑cut stance to a series of hikes – the first increase since 2023 – as inflation remains stubbornly high. The policy pivot has lifted the US Dollar Index by more than 3% year‑to‑date, while real yields have risen 1.06% year‑to‑date, reaching the highest level in 24 years. Higher real yields make US Treasury bonds more attractive relative to gold, which offers no interest income, thereby reducing demand for the yellow metal.
Expectations of further monetary tightening persist. Market participants anticipate at least one more rate hike before the end of the current year and roughly three additional hikes by the close of the following year. In addition, the import duty on gold in India remains at 15%, a level that analysts say is unlikely to be reduced soon given the rupee’s weakness and elevated oil and fuel prices.
Expert views on support levels
Praveen Singh, Head of Commodities at Mirae Asset Sharekhan, highlighted a strong support band for spot gold in the $3,930‑$4,000 range. He cautioned that implied gold volatility sits near 25%, which raises the probability that this zone could be tested. “A decisive breach of this support zone will expose $3,600‑$3,750 as the next possible support band,” Singh told the Times of India, adding that the chance of a fall into that lower region is about 25%.
Translating those levels into Indian rupee terms, Singh said gold could dip to roughly Rs 134,000 per 10 grams. He ruled out a plunge to Rs 100,000 (equivalent to $2,800) as unlikely, noting that structural factors such as debasement concerns, de‑dollarisation, ongoing US‑China tensions, official‑sector buying and broader financial repression continue to underpin the metal.
Should oil prices retreat sharply and the Middle‑East situation stabilise, Singh suggested a temporary reduction in import duties could make domestic gold cheaper, potentially allowing prices near Rs 125,000 per 10 grams. He warned, however, that such a dip would likely be short‑lived, as lower domestic prices would spur demand and push international gold higher.
Commodity expert Maneesh Sharma offered a complementary perspective. He noted that a weakening rupee – which recently rose to 96.30 against the dollar – could provide support for Indian gold if international prices fall. “A fall in gold prices to near $4,000 per ounce might see MCX gold falling to around Rs 1,45,000 per 10 grams,” Sharma told TOI.
Sharma also projected that spot gold could still slide to $3,950‑$4,025 per ounce, translating to Rs 1,44,500‑1,46,200 in MCX futures. He qualified that a drop to Rs 125,000 would likely require a further escalation in US 10‑year yields following a hot US CPI reading in October – an outcome he deemed less probable at present.
Domestic outlook and demand dynamics
In India, two factors may temper the impact of the global correction. First, the high import duty keeps domestic prices above international levels, limiting the immediate transmission of foreign price falls. Second, the onset of the festive and wedding season traditionally fuels a surge in gold demand, providing a floor for prices.
Both Singh and Sharma agree that any decline in international gold prices will be reflected domestically, but the extent may be softened by the rupee’s weakness. Singh explained that a weaker currency can cushion domestic price drops because the rupee’s depreciation offsets part of the price decline.
Consumer behaviour is also shifting. Singh observed that buyers are favouring lighter‑weight jewellery and that growing interest in gold exchange‑traded funds (ETFs) is dampening outright jewellery demand. Meanwhile, Sharma pointed out that import demand contracted noticeably in August due to higher duties, yet the recent price dip has attracted buyers ahead of the Diwali season.
Both analysts highlighted longer‑term fundamentals that could revive upward momentum. These include potential re‑escalation of US‑China tensions, renewed inflation pressures, concerns over US fiscal deficits, and central‑bank purchases. Sharma added that improved ETF flows since August and continued central‑bank buying could provide structural support over a six‑to‑nine‑month horizon.
Overall, the consensus among the quoted experts is that gold is likely to continue its correction in the near term, but the move may serve as a “healthy consolidation phase” before the metal resumes its longer‑term upward trend later in the quarter.
Investors should therefore monitor real yield movements, US monetary policy signals, and domestic demand patterns as the metal navigates these intertwined forces.
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