Gold markets witnessed a sharp correction on December 29, as prices slipped significantly across major global and domestic exchanges. The sudden decline, driven by widespread profit-booking and easing geopolitical concerns, left investors surprised after weeks of strong upward momentum.

On the Multi Commodity Exchange (MCX), gold futures crashed more than ₹5,000, falling 3.59% to around ₹1,34,850 per 10 grams during late evening trade. The decline followed a spectacular rally that pushed gold to fresh record levels earlier this week.

In the international market, spot gold plunged 3.6% to USD 4,367.97 per ounce, erasing a significant portion of the gains made after touching an all-time high of USD 4,549.71 per ounce on December 26. U.S. gold futures mirrored the drop, falling to USD 4,387.40 per ounce. The massive selloff also spilled over into other precious and industrial metals such as silver, platinum, and copper — all recording notable declines.

🔹 Year-End Profit-Booking Pulls Prices Down

Analysts attribute the steep fall mainly to profit-booking at elevated price levels. Over the past few weeks, gold had delivered substantial returns, prompting investors — both domestic and foreign — to secure gains before the year ends.

Experts note that once gold crossed key psychological resistance levels, traders anticipated a pullback. The high valuations triggered a wave of selling, accelerating the price correction within a matter of hours.

🔹 Geopolitical Tensions Ease: Less Demand for Safe-Haven Assets

Gold is traditionally considered the world’s strongest safe-haven investment, flourishing during uncertainty and military conflict. However, optimism around potential diplomatic progress in the Russia-Ukraine conflict reduced the urgency for risk-averse asset allocation.

Reports indicate that U.S. President Donald Trump and Ukraine’s President Volodymyr Zelenskyy held constructive talks in Florida, exchanging views on a possible roadmap toward peace. As expectations of reduced geopolitical risk strengthened, investors shifted funds away from gold and into riskier assets, contributing to the slump.

🔹 Gold Entered the “Overbought Zone”

Market strategists also pointed out that gold prices had surged far ahead of core fundamentals. With prices racing toward levels near USD 4,600 per ounce, technical indicators signaled an extreme overbought condition.

Such parabolic moves often lead to abrupt corrections, as the market struggles to sustain elevated valuations. Experts believe the current downturn is a healthy consolidation phase rather than a long-term reversal. After prices stabilize, analysts expect gold to regain strength gradually.

What Should Investors Do Now?

Financial advisors recommend that investors remain calm and stick to a disciplined asset-allocation strategy. They suggest:

✔ Maintain up to 10% allocation of gold in your investment portfolio
✔ Avoid panic-selling during sharp corrections
✔ Rebalance holdings only if gold exposure has exceeded recommended limits

Those who have been waiting for lower entry points may gradually accumulate gold, especially through SIP-based investments in sovereign gold bonds, ETFs, or digital gold.

Outlook: Correction May Be Short-Lived

While the fall appears steep, experts emphasize that the long-term outlook for gold remains supported by:

• Persistent global economic uncertainties

• Central bank gold purchases

• Limited mining supply growth

• Strong investment demand

If geopolitical risks resurface or economic challenges worsen, gold prices could again rebound swiftly from current levels.