Gold Prices Rebound on Weak Dollar: Should Investors Buy on Dips or Book Profits?
Gold prices rebounded sharply on Friday, supported by a weaker US dollar, improved spot demand, and persistent geopolitical uncertainty. Market participants remain divided between buying on declines and locking in profits after the recent rally.
On the domestic front, MCX gold April futures surged over 2% to ₹1,55,374 per 10 grams, while MCX silver March futures climbed nearly 3% to ₹2,50,300 per kg. The gains were driven by short covering and renewed hedging demand amid global uncertainty.
Internationally, gold prices also posted strong gains. US gold April futures settled 1.8% higher at $4,979.80 per troy ounce, tracking weakness in the dollar and expectations of policy easing.
What Triggered the Gold Price Rebound?
A key driver behind the rally was a 0.20% fall in the US dollar index, which made dollar-denominated bullion cheaper for overseas buyers. Additionally, expectations of interest rate cuts by the US Federal Reserve continue to provide underlying support to gold prices.
According to a report from the University of Michigan, median one-year inflation expectations declined to 3.5%, the lowest level since January 2025. This data strengthened market optimism around potential rate cuts in the coming months.
Geopolitical factors also played a role. While talks between the US and Iran began on a positive note, the lack of clarity on future negotiations kept uncertainty elevated, encouraging safe-haven demand.
Is It the Right Time to Buy Gold?
Market experts expect gold prices to remain volatile in the near term but believe the medium- to long-term outlook remains constructive.
“This is not the end of the cycle. Gold may still be in the early stages of a longer structural repricing,” said Rishabh Nahar, Partner and Fund Manager at Qode Advisors.
One of the strongest long-term drivers remains aggressive central bank buying. Official data already shows central bank gold purchases at multi-decade highs, while actual accumulation—particularly by China—may be significantly higher than disclosed.
Historically, reserve diversification away from the US dollar is often reported with a lag. Under-reporting during accumulation phases has precedent and is viewed by analysts as a bullish indicator rather than a neutral signal.
Retail Demand and ETF Inflows Support Gold
Another key shift supporting gold prices is the change in retail investor behaviour. Gold ETFs are witnessing strong inflows globally, suggesting that gold is increasingly being viewed as a strategic portfolio allocation rather than just a hedge during crises.
Gold also remains under-owned at a global portfolio level compared to US equities. Even modest reallocations by large institutional investors could have an outsized impact on prices due to limited supply growth.
Should Traders Book Profits?
While the broader outlook remains positive, short-term traders are advised to exercise caution.
Jigar Trivedi, Senior Research Analyst at IndusInd Securities, noted that momentum appears stretched in the near term.
“Prices are hovering near supply zones where physical demand tends to thin and speculative activity cools. For existing long positions, partial profit-booking with a trailing risk cover looks prudent,” Trivedi said.
He added that fresh buying should be selective rather than aggressive and ideally follow price consolidation or clearer macro signals such as further dollar weakness or falling bond yields.
For the coming week, Trivedi sees ₹1,60,000 per 10 grams as the next key level for MCX gold.
Bottom Line
Gold’s long-term fundamentals remain strong, supported by central bank buying, ETF inflows, and macroeconomic uncertainty. However, given near-term volatility, experts suggest a balanced approach—buying on dips for long-term investors while short-term traders consider protecting gains through partial profit-booking.
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