Historically, gold has exhibited a characteristic pattern of correction, typically around 10%, following a robust rally. Recent instances underscore this trend. In March 2022, gold prices surged to 55,000 before experiencing a correction to around 49,500 by October 2022. Similarly, in January 2023, prices peaked at 59,000 and corrected to approximately 54,500 by March 2023.
Another surge occurred in April 2023, reaching 61,800, followed by a correction to around 56,500 by October 2023.
As the current rally propels gold prices beyond 62,500, historical trends suggest that a correction of approximately 10% may be on the horizon. This correction tends to manifest once prices reach a peak or exhibit signs of stabilization after a robust surge.
Extrapolating from recent rallies, it is plausible to foresee the current 3-4 months upward trajectory extending into January 2024, with gold prices potentially reaching 63,000-64,000.
Subsequently, a correction phase could ensue, bringing prices down to the vicinity of 59,000. However, it is essential to note that this scenario is contingent on the absence of new positive updates about potential rate cuts in the United States. Gold has historically demonstrated a strong rally in response to rate cuts, and any such developments could alter the trajectory outlined above.In conclusion, while past trends provide valuable insights into the potential future movements of gold prices, external factors such as geopolitical events, economic indicators, and central bank decisions can significantly influence the trajectory. Investors are advised to remain vigilant and stay abreast of the dynamic market conditions to make informed decisions in the ever-evolving landscape of precious metal investments.
(The author is , Vice President Research Analyst at LKP Securities)
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times.)
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