Buy, sell or hold: How should retail investors look at gold amid easing global tensions?

After slipping to Rs 93,080 on May 12 from Rs 96,416 per ten gram (999 purity) on May 9, physical gold prices rose to Rs 94,344 at 6 pm on May 13, as per the India Bullion and Jewellery Association (IBJA). June gold futures on MCX, too, were up 1.26 percent to touch Rs 94,070, after falling 3.79 percent to close at Rs 92,860 on May 12.

“(International) gold prices dropped nearly 3 percent to $3,230 an ounce on May 12, hitting a one-month low amid improved investor sentiment following a major US-China tariff rollback. Both countries agreed to significantly cut tariffs for 90 days, easing trade tensions and reducing demand for safe-haven assets,” said a Way2Wealth note.

Industry watchers and analysts expect the yellow metal to remain volatile with a downward bias in the near term. “Gold could be volatile for now. We expect a correction of 3 percent from here. International prices could dip to $3,150 per ounce in the next 30-40 days, in the backdrop of progress in US-China tariff talks. On the domestic front, gold could go down to Rs 90,000-91,000, as the India-Pakistan conflict seems to be settling at present,” said Navneet Damani, Head, Research, Commodities and Currencies, Motilal Oswal Financial Services.

The narrative around gold could weaken due to the easing of geopolitical tensions, which had been supporting higher prices. As per a Way2Wealth analysis, MCX Gold is likely to remain volatile going forward, with support placed at 92,200 currently, and resistance at 97,000.

Then, there are other experts who continue to be bullish on gold. “Internationally, gold is witnessing some short-term correction due to easing inflation and stronger economic cues from the US, but the long-term fundamentals remain strong. Central bank buying, geopolitical uncertainties, and likely rate cuts continue to support a bullish outlook. Domestically, Indian demand is steady, backed by cultural affinity and the upcoming festive and wedding season. We expect gold prices to remain stable to firm over the next few quarters,” said Aksha Kamboj, VP, India Bullion & Jewellers Association (IBJA) and Executive Chairperson, Aspect Global Ventures.

Also read: Is the rally over in gold?

She advises retail investors to view it as a long-term asset rather than a short-term trade.
“Current price dips present a good opportunity to accumulate gradually. While gold may exhibit sluggish trends in the short term, it remains a safe-haven investment from a long-term perspective,” added Kamboj.

At the moment, retail investors should wait and watch before taking investment calls around gold. “They can look at entering when gold rates dip to Rs 90,000. Also, look at silver, too, as it could outperform gold in the days to come,” said Damani.

Financial planners typically recommend exposure of 10-15 percent to gold in retail investors’ portfolios. Buy or sell calls need to be taken not on the basis of price movements, but on gold’s planned asset allocation in your financial planning strategy.