Gold prices drop: What experts say about the precious metal's upside potential

Gold and silver prices, which have been rising over the past several months amid global uncertainties, dropped a bit. However, experts say that the price pullback is temporary and the precious metals can witness an upside in the near future.

What experts said about gold prices

Rajesh Rokde, Chairman of the All India Gem and Jewellery Domestic Council, said that gold prices rose by $1,100 per ounce over the past four months. Hence, the correction was expected but will not last long.

"Gold has seen a one-sided rise. If I look at the last four months, it has gone from around USD 3,300 per ounce to USD 4,400 per ounce, which is nearly an increase of USD 1,100 per ounce. Over the past year, in the Indian market, prices have risen for 24 karat gold from Rs 75,000 per 10 grams to Rs 1.3 lakh per 10 grams. So, this correction was expected," he said.

He said that the gold is bullish amid strong international demand. He said the prices of gold can fall a bit more before a strong recovery.

"Gold is currently around USD 4,100. It might correct another USD 50-100, but there's little chance of a deeper fall because central banks across the world are in buying mode," he added.

He said the United States' tariff war and geopolitical tensions will continue to support safe-haven demand.

"Many countries are moving toward de-dollarization, trying to reduce the dominance of the dollar, and for that, gold is seen as the safest alternative. China, being one of the largest exporters, receives payments in dollars and then converts them into gold," he explained.

He said that the prices of gold in India will increase again.

"Gold has already risen so much that this correction doesn't seem very significant. Even now, prices are around Rs 1.25-1.26 lakh per 10 grams. I still see strong potential for gold prices to rise further," he said.

He also saw upside potential in silver despite a marginal pullback.

"From January until now, prices have gained around 85 per cent. So, a small pullback in prices is still possible. When a commodity rises by 100 per cent, a 10-20 per cent correction doesn't really matter," prominent trader Ajay Kedia said.

He, however, said that current levels of gold are not suitable for buying because the prices could slip further.

"There will likely be continued pressure on gold, and its movement will depend on the outcome of meetings between Donald Trump and China, as well as between Russia and the US. From an investment point of view, there is currently extreme volatility. Gold could move down to around Rs 1.25 lakh, so the current levels are not suitable for buying," Kedia added.