Surendra Mehta, the national secretary of the India Bullion and Jewellers Association (IBJA), has said that the biggest reason for the fall in gold prices was the dollar strengthening against other big currencies. The US dollar index has strengthened against major currencies. The US dollar and gold are negatively correlated, therefore as demand for the American currency goes up, the price of the yellow metal comes under pressure. US bond yields have also risen causing a correction in gold prices.

Mehta said that after the beginning of the vaccination drive against the coronavirus disease and a spurt in economic activity, people are now turning to more risky investment options for stronger profits. These include options such as equity and cryptocurrency. People are also looking to invest in riskier assets such as equities and cryptocurrencies. However, Mehta feels this correction is likely to be short-lived and people should use this as an opportunity to bet on e gold. The current rally across assets such as equities is powered by liquidity and is unlikely to last long. If equity markets correct, people will again get into gold as it is a safe haven asset. Also, the US is expected to announce a further stimulus package anytime soon which may drive gold prices higher. He feels that gold prices may again touch a high of $1960 per ounce in the next 3-4 months that is around $150 above its current level.