Gold - From Euphoria to Reality
Welcome back,
A few days back, people were talking about gold as if there was no other asset in the world. And today, people have lost hope in gold, as if there is no worse asset than gold.
This kind of shift is very natural. Most people in the market simply go with the flow. They think an asset is good when it goes up, and they think the same asset is bad when it comes down.
Currently, gold is trading around ₹1,40,000 INR for 22 karat, and ₹1,53,000 INR for 24 karat, whereas just a few days back, it was trading close to ₹1,84,000 INR.
That is a drop of almost ₹30,000 INR, which is a significant correction. Just imagine those people who bought gold at the top a few days ago. Now they have no option but to hold the asset until it reaches their break-even price so they can book some profit.
But believe me, this correction is actually very healthy for gold. Gold has been making higher highs continuously for the last 2 years, and it has performed extraordinarily well.
A correction like this was very much needed. What is happening right now is completely acceptable and was bound to happen sooner or later.
The best approach now is to wait for gold to fall to a level where it starts consolidating again.
That would be a better zone to accumulate gold once more. If not that, then the safest option right now is to follow DCA and avoid putting a large lump sum amount at once. DCA works best for long-term investors.
If you are a short-term trader thinking that this is the right time to trade gold futures, I would strongly suggest staying away.
At this point, technical analysis may not help much because gold has moved too aggressively over the past few months, breaking level after level. In such conditions, patience is far more important than prediction.
So wait, observe, and enter only when the market gives a clearer structure.
Thank you and happy trading everyone.