Gold prices fell on Monday (October 28), a day ahead of Dhanteras, a traditional time for gold purchases in India. International rates were pressured by a stronger US dollar. Spot gold was down 0.5 percent at $2,733.01 an ounce, and U.S. gold futures were down 0.3 percent at $2,745.5.

In India, the 24 carat the gold rate it was trading at INR 80,430 per 10 grams, while the 22 carat variant, popular for jewellery, was priced at INR 73,740 per 10 grams.

The dollar index gained 0.2%, its strongest monthly gain since April 2022.

This dollar strength has diminished the appeal of gold as a safe haven.

Tim Waterer, chief market analyst at KCM Trade, noted: “The rebound in the US dollar after the Japanese election has hurt gold’s appeal.”

However, he also pointed out that “gold still looks well positioned to reach $2,800 an ounce, depending on future economic data.”

Key data ahead: Fed and employment figures

This week, investors are watching U.S. economic reports, including data on employment, job openings and core personal consumption expenditures (PCE), closely linked to inflation.

These reports could influence the Federal Reserve’s next steps on interest rates, with markets already predicting a high probability of a quarter-point interest rate cut in November.

Lower rates typically increase the attractiveness of gold by reducing the opportunity cost of holding unyielding bullion.

Geopolitical tensions and demand for safe-haven assets

Gold hit an all-time high of $2,758.37 last week amid geopolitical concerns, with safe-haven buying rising after heightened tensions in the Middle East.

Israeli airstrikes in Iran and growing election uncertainty in the US, with a tight race between Donald Trump and Kamala Harris, have added to the general uncertainty fueling interest in gold.

In India, with Dhanteras – a day traditionally considered auspicious for buying gold – falling on Tuesday (October 28), demand may increase as people prepare for Diwali.

“Given the current global environment, it remains a good time to invest in gold,” advised Santosh Joseph, CEO of Germinate Investor Services, highlighting gold’s role as a hedge against macroeconomic risks.

Is it the right time to buy gold?

Experts see the recent decline as a potential buying opportunity for long-term investors.

Sandip Raichura, CEO of Broking and Retail Distribution at PL Broking, pointed to a “bullish flag pattern” in gold, signaling fresh upward momentum.

Geopolitical risks combined with the potential for interest rate cuts create a favorable outlook for gold appreciation.

Experts recommend that gold should ideally constitute 5-10% of the investment portfolio to provide long-term security against economic instability and inflation.

That DhanterasIn approaches, the short-term decline could be seen as an opportune entry for those looking to balance their portfolios with the stability that gold offers.