Gold and Silver may crash soon, according to an expert

Global Gold Hits All-Time High of $4,000/oz; Experts Fear Imminent Correction Following 37.5% India Rally

Gold and Silver may crash soon, according to an expert

International Gold Hits All-Time High of $4,000/oz; After 37.5% India Rally, Experts Warn of Imminent Correction).

Tuesday saw international gold prices reach an all-time high of $4,000/ounce, continuing the upward trend despite global headwinds. International gold prices have increased by 30% this fiscal year.

Things have been better in India. The yellow metal has increased 37.5% in the current fiscal year. It is up 6% in the first eight days of October alone. \ Nonetheless, analysts see indications that profit-booking may be imminent.

Concerns like the US shutdown and the potential for an Israel-Hamas peace agreement are being closely monitored on a global scale. A possible catalyst for profit booking in gold and silver is the dollar index, which is currently trading at a two-month high and is getting close to the 99 level.

Headwinds worldwide fuel a historic rally

The dollar index increased 1.27% this week and is currently trading at 98.7, according to Anuj Gupta, director at Ya Wealth Global. This is the first indication that gold and silver are ready for profit-booking.

I agree. "Gold is very overbought and vulnerable to a pullback," stated Nigam Arora, an algo analyst based in the United States and the author of the Arora report.

He lists the following as triggers: the dollar's strengthening, the end of the US government shutdown, and the Federal Reserve's October interest rate-cutting decision.

French and Japanese bond yields are increasing, among other factors. There may be a correction in gold prices if a new government in France is able to pass the budget or if the prime minister-to-be in Japan makes it clear that she will not allow fiscal policy to run wild and does not put pressure on the Bank of Japan to lower interest rates.

A sharp correction is indicated by an overbought market.

The price of silver is also steadily increasing, in addition to gold. According to Arora, silver will move 1.7 times faster than gold in either direction. This implies that when the silver price drops, it will do so 1.7 times more quickly.

Given how swift the rally was, the correction, when it occurs, may be severe. Extremely abrupt corrections were observed in the short term during the last few decades in a bull market, but the rally persisted in the medium term.

According to Chirag Mehta, CIO at Quantum AMC, "We can't rule out some correction, even though the underlying factors are still positive for gold given the sharp 30%-odd rally in a short period of time." Similar to past bull markets in the 1970s or 2000s, an overbought market will benefit from a correction of 10–15%. Nonetheless, he thinks that gold investors are fundamentally bullish.

Additionally, Chirag Sheth, principal consultant at London-based bullion research firm Metal Focus, stated that they are still optimistic and that the general momentum will continue.