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Below the Quote on correction in gold prices by Chirag Mehta, CIO, Quantum AMC

Gold has corrected sharply from its January 2026 peak, with international prices down by roughly 28%. The correction has been driven by a combination of higher energy prices along with geopolitical uncertainties with new supply threats around the red sea adding into the mix. In effect, a stronger US dollar, higher real yields, and markets reassessing expectations of Federal Reserve policy has also been weighing on gold.

The view is that the current phase does not alter long-term structural drivers of gold. The recent weakness in gold is consistent with this framework. Expectations of further Fed rate hikes have pushed real US interest rates higher and flattened the US yield curve, placing downward pressure on the gold price. Historically, however, such pressure has tended to ease once markets conclude that policy has become sufficiently restrictive. Our view remains that the Fed's next move is ultimately more likely to be a rate cut than a sustained hiking cycle. Even if the Fed were to raise rates again in the coming months, it could quickly become apparent that the move was a policy mistake, necessitating another pivot. As expectations shift from further tightening towards eventual easing, the headwind from higher real rates should begin to fade, allowing gold to recover. Central bank reserve diversification, elevated fiscal deficits across major economies, geopolitical uncertainty, and continued demand for portfolio diversification remain intact. While near-term volatility may persist as markets react to interest rate expectations, periods of correction have historically created opportunities for disciplined, long-term investors to build strategic allocations.

From a Gold ETF perspective, lower prices need not be viewed negatively. The corrections have often presented an investment opportunity to increasing allocation to gold.

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