Gold prices in India have eased from recent highs, but the decline is seen as a technical correction rather than a sign of weak momentum. After rising steadily over the last few months, MCX gold touched a crucial Rs. 1,21,800 had slipped towards the support zone, raising questions as to whether the broader rally was losing steam.

However, analysts insist that the pullback is taking place within an established uptrend, with key structural levels for the Indian market still intact.

The recent move in gold has been characterized as a retest of previous support zones rather than a bearish trend driven by fundamentals. Local and global charts continue to trade in broad bullish patterns, indicating that the larger trend remains upward.

Analysts note that although the interim declines look sharp, the underlying setup for Indian gold prices remains constructive as long as key supports hold.

Ponmudi R, CEO, Enrich Money, sharing his outlook, said that the recent correction is manifesting in a strong trend. According to him, “This week saw a healthy correction in gold prices on both the COMEX and MCX, even as the broader trend remained strongly upward.”

He observed that MCX gold was priced at Rs. Support has been found near the 1,21,800 zone, he said, adding that “the October-November movement on the MCX also shows a distinct curve pattern, suggesting a cyclical pullback in a strong uptrend rather than any structural weakness.”

He further noted that the decline is part of a technical process, saying that “the decline is essentially a technical retest of the rising trendline, an area where buyers have consistently returned over the past three months.”

He added that “Both the local and global charts continue to trade within an ascending broadening wedge, a pattern where prices continue to rise while volatility widens, indicating that the larger trend remains bullish despite the magnitude of the interim decline.”

For the Indian market, the analyst highlighted key levels to watch. On MCX, “Rs 1,21,800 remains the first major support,” below which the next cushion is “Rs 1,19,250-Rs 1,17,600”. The resistance for the coming sessions is kept at “Rs 1,24,000-Rs 1,24,500”.

As long as gold remains above its immediate support, Ponmudi R said the bullish structure will remain intact. If stability emerges around the current zone, he added, gold on the MCX could rise to Rs. 1,25,500, Rs. 1,27,200 and Rs. 1,28,800 may be revised.

A breakout above these levels could potentially mark the next phase of the rally, the report noted, adding that this could push Indian prices “towards Rs 1,30,000+ in India, confirming a new momentum phase.”

On the downside, he warned that if MCX gold slips below its key support, “the market may enter a short-term cooling phase,” with the next support “locally at Rs 1,20,800-Rs 1,19,500.” However, this is still within the broader technical framework unless further breakdowns occur.

Despite the recent decline, the medium-term tone remains supportive. “The medium-term outlook for gold remains positive,” Ponmudi R said, citing several factors such as global currency trends, central bank hoarding, geopolitical tensions and inflation expectations.

He concluded that “these factors reinforce the view that gold remains in a formative phase as long as key support levels remain strong, maintaining a bullish bias.”

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(disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. (These do not represent the views of The Economic Times)