The correction has also hit domestic markets. MCX gold futures declined around 4% over the week, ending near ₹1,42,024 per 10 grams after touching an intra-week low of ₹1,41,334. On Friday, futures fell 0.92%, or ₹1,315, to settle at around ₹1,41,994 per 10 grams.
In Chennai, retail prices of 24-carat gold dropped 3.85% over the week, falling ₹5,560 per 10 grams from ₹1,48,190 to ₹1,42,480. On Friday, 24-carat gold declined ₹190 per gram to ₹14,248, while 22-carat jewellery gold fell ₹175 per gram to ₹13,060.
Why are gold prices falling?
Rising oil prices have emerged as a major headwind for bullion. Brent crude climbed above $112 per barrel amid concerns over energy supply disruptions following Houthi strikes on Saudi oil infrastructure. Higher crude prices can fuel inflation, potentially prompting central banks to keep interest rates elevated for longer.
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Higher interest rates and Treasury yields typically reduce gold's appeal because the metal does not generate interest income. A relatively strong US dollar has added to the pressure.
Selling across asset classes has also contributed to the decline. An equity market correction linked to artificial intelligence-related stocks prompted investors to sell liquid holdings to meet margin calls, adding to the pressure on precious metals.
Gold price outlook: Where are the next support levels?
The immediate outlook remains uncertain, with experts watching the $4,000-an-ounce threshold.
Ponmudi R, CEO of Enrich Money, a SEBI-registered online trading and wealthtech firm, said COMEX gold ended the week near $4,008 after slipping below $4,000 during the sell-off. The immediate support zone is at $3,970-$4,000, while a break below this range could drag prices towards $3,900.
On the upside, gold faces resistance at $4,070-$4,100, followed by $4,170-$4,200. A sustained move above these levels would be needed to improve the near-term technical outlook.
On the domestic market, Ponmudi identified ₹1,40,000-₹1,41,000 as the immediate support zone for MCX gold. A break below this range could take prices towards ₹1,37,500-₹1,38,300. The daily relative strength index (RSI) is near 31, close to oversold territory, while the moving average convergence divergence (MACD) indicator remains negative, suggesting persistent selling pressure.
However, oversold conditions also raise the possibility of a short-term relief rally. The US Federal Reserve's October 27-28 policy meeting and upcoming personal consumption expenditures (PCE) inflation data could influence the next move in bullion.
Should buyers buy gold before Diwali?
For jewellery buyers purchasing for weddings or festive occasions, the correction could offer some relief. However, the possibility of further declines means that buyers should avoid assuming prices have bottomed out.
The decision also depends on whether the purchase is for consumption or investment. Jewellery involves making charges and other costs, which can reduce its value as a short-term investment. Gold exchange-traded funds (ETFs), meanwhile, provide market-linked exposure without the need to store physical gold. Digital gold offers another route, but investors should examine the provider's credibility, costs and regulatory protections before investing.
Those planning festive purchases can consider staggered buying rather than committing the entire amount at once. This approach spreads purchases across different price levels and reduces the risk of investing the entire sum immediately before another decline.
For investors seeking short-term gains, waiting for prices to stabilise may be more prudent. A sustained recovery above key resistance levels would provide stronger evidence that selling pressure is easing.