Gold Prices Sink - Sign of Market Decline or Purchase Boom?
In recent weeks, the price of gold has seen a significant drop, with the precious metal falling from a record high of $2,789 to around $2,550, representing an 8.5% decline. Despite this, experts remain divided over whether this marks the end of the gold price rally or simply a temporary setback.
According to several analysts, the current trend fits into a pattern of continued decline rather than a sustained recovery. This is based on technical analysis comparing current price movements to patterns observed at the end of gold's 2011 bull market, where after two peaks and a failed rally attempt, a prolonged downtrend followed. In 2025, gold has shown a similar "breakdown" and back-and-forth decline, suggesting the recent rally was likely a temporary retracement within a broader bearish trend, not the start of a new upward run.
Technically, gold has broken below previous support lines and failed to sustain rallies, similar to late stages of the 2011-2013 bear market phase. Inflation remains relatively low and stable, with minor changes (e.g., 2.3% to 2.4% in May 2025), which tends not to favor strong gold price increases since gold often spikes with rising inflation but stays flat when inflation is steady. The Federal Reserve is maintaining an interest rate pause, with no immediate rate cuts expected before September 2025. Higher or stable rates generally pressure gold prices downward.
Recent price actions show gold losing value in both global and domestic markets, with prices in key Indian cities declining about 0.80% internationally and around ₹460 domestically, indicating sellers dominating the market short-term.
However, not all experts share this pessimistic outlook. Bill Peterson of J.P. Morgan predicts new record highs for gold prices by the fourth quarter, citing ongoing geopolitical risks and economic weakness in Europe and China as potential drivers. Daniela Sabin Hathorn of Capital.com shares Peterson's sentiment, echoing his concerns about global conflicts and economic instability in Europe and China.
Interestingly, the election of Donald Trump as U.S. President has not yet reflected positively in the gold prices as expected. Despite being seen as bullish for gold due to his plans to increase the national debt, this has not yet been reflected in the prices. The U.S. economy, expected to be boosted by Trump's policies, is a factor contributing to the decline in gold price. The lack of riots or civil war, contrary to what some experts had predicted, is one of the factors behind the decline in gold price.
In summary, experts suggest the recent price drop may mark continuation of a bearish phase rather than a decisive buying opportunity. However, some investors might view these dips as potential entry points if they anticipate longer-term rebound. The consensus based on current patterns and macroeconomic factors is caution with a bearish tilt. Nonetheless, analysts remain bullish on the precious metal, keeping an eye on geopolitical risks and economic instability for potential price increases in the future.
Stock market investors looking for new opportunities might consider the gold market, as some analysts predict that gold prices could increase in the future. J.P. Morgan's Bill Peterson, for example, has predicted new record highs for gold prices by the fourth quarter of this year, citing ongoing geopolitical risks and economic weakness in Europe and China as potential drivers. This contradicts the current trend, where the price of gold has been declining in both domestic and global markets.
