Has gold’s rally finally cooled off? Salam
Assalamu alaikum - bargain hunters might see the recent retreat in gold and silver prices as a chance to add to long positions, say market watchers.
After a sharp run to record highs, gold and silver were due for a correction, so some profit-taking was expected. The longer-term fundamentals remain intact, and support levels are still in place.
Gold fell more than 5% on Tuesday - its biggest one-day drop since August 2020 - but was trading up 1.13% at $4,144.31 by mid-morning UAE time the next day. Silver also plunged nearly 7% before recovering about 1.36% to $49.10.
A stronger US dollar and heavy profit-taking weighed on prices after the recent highs, said Bas Kooijman, CEO of DHF Capital. He noted that reduced worries about US-China tensions, hopes of an end to a government shutdown, and easing concerns over regional banks helped the dollar, which in turn cooled some safe-haven demand for gold.
Still, geopolitical risks in Eastern Europe and the Middle East and expectations of Fed rate cuts provide a supportive backdrop, so the metal could attract buyers when prices dip.
US-China trade talks and other macro headlines also shape sentiment. Gold is up roughly 56% this year, hitting an all-time peak recently, driven by safe-haven flows amid geopolitical worries, expectations of lower US rates, and steady central bank purchases.
Some strategists warn the market was running very long and got a reality check after a parabolic move. But others say the broader bull market that began in mid-2023 remains intact and the fundamental case for gold still makes sense.
Analysts at Swissquote and others point out the metals were in very overbought conditions with heightened volatility, so further pullbacks are possible. Yet many see any correction as an opportunity to add to positions rather than a signal that the bull run is over.
Dealers in the region say short-term dips can boost interest in buying physical gold. Longer term, sustained central bank buying, geopolitical tensions and inflation pressures support an upward trend, even if healthy corrections happen along the way.
Some private banks have lifted 12-month targets for gold, while noting risks such as a more hawkish shift by the Federal Reserve or a big fall in jewellery demand. Jewellery demand has eased but has been offset by flows into physically backed ETFs and central bank purchases.
For silver, supply tightness and rising demand from renewable energy and industrial uses could keep it supported over the next 12–18 months. Analysts say further Fed rate cuts would help metals, and the recent pullback seems to have found some footing around $49, with a bit more downside possible.
Overall, while volatility and corrections are part of the picture, many observers still view dips as buying opportunities for those looking to increase exposure - and as always, one should consider personal financial goals and consult a trusted adviser before making investment moves. Wa salam.
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