Gold could see a correction of 8- 10%

A correction of 8- 10% cannot be ruled out from these levels which will be a good point for investors to enter the yellow metal.

Gold had made a meaningful top near 55,900-56,000 levels. It has rallied more than 100% in the last 4 years i.e from 25,000-odd levels to 56,000.

Even with all the headwinds the world witnessed in 2020 due to the pandemic, gold hasn't managed to rally further.

Currently, Gold is trading in the range of 48,500-51,000 and has delivered negative returns in the last 2 months. Also, with the COVID-19 vaccine expected to arrive early next year, we can see some more pressure on the precious metal at these levels.

With economies recovering from the last quarters, gold may not be the choice for the investors for the medium-term, so investors may have to wait a little longer for a return on their investment.

On the fundamental front, Gold remains a hedge against any monetary policy failure. With the rise in COVID-19 cases across Europe and chances of the second wave hovering over the world, hedge/pension funds remain interested in buying gold even at current levels. Moreover, the physical demand for Gold remains strong.

Gold exchange-traded funds saw net inflows of over Rs 2,400 crore in the last three months ended September 30 as investors continued to hedge their exposure to riskier assets due to higher economic uncertainty resulting from COVID-19. In October, net inflows continued with a flow of Rs. 384 crore according to AMFI'S monthly data.

From the technical perspective, as per Elliot Wave Analysis, Gold has completed all 5 waves over the course of its movement from 25000-56000 and a reasonable correction is due followed by a good consolidation.

Gold has support around levels of 48500-49000- 23.6% of 25000-56000= 31000 levels. Till it holds that level, a rally up to 54000 cannot be ruled out. Below the levels of 48500-49000, supports are at around 46000 (33%) and 44300 (38.2%) of the up move.

Despite the gold market dipping briefly at the start of the year with the lockdown, the demand for gold has seen some upswing during the festive season.