Gold corrects 24.6% from record high: Why Mirae Asset sees an investment opportunity below $4,200

Gold prices have corrected 24.6% from their 2026 all-time high of $5,417 per ounce, but Mirae Asset Mutual Fund believes the decline could present an investment opportunity, with central bank purchases, geopolitical uncertainty and reserve diversification continuing to support the precious metal's long-term outlook.

In its October 2026 outlook, based on data as of October 6, the fund house said the correction was primarily driven by rising US Treasury yields and expectations of further monetary tightening rather than weakening underlying demand. It considers international gold prices below $4,200 per ounce an investment opportunity, while cautioning that volatility could remain elevated in the near term.

Why gold prices have corrected

The US 10-year Treasury yield rose to 5.27% as of October 6, from around 4.1% in October 2025, according to Mirae Asset Mutual Fund. Higher bond yields reduce gold's relative attractiveness because the precious metal does not generate interest income.

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Expectations of interest rates remaining higher for longer, a stronger US dollar and profit-booking after the rally in 2025 and 2026 have added to the pressure. However, the fund house believes the correction is cyclical rather than a reflection of deteriorating long-term fundamentals.

The IBJA Bullion Daily Market Report dated October 9 also highlighted the pressure from elevated energy costs and expectations of tighter monetary policy. It noted that gold had recovered from a two-month low but remained on track for a third consecutive weekly decline. December COMEX gold futures rose 0.39% to $4,157 per ounce in the report's market snapshot.

Central bank buying supports outlook

Mirae Asset expects central bank gold purchases to remain around 700 tonnes in 2026, compared with an average of 470 tonnes annually between 2010 and 2021. The fund house also cited survey findings indicating that 89% of central banks expected global gold reserves to increase, while 45% planned to raise their own holdings.

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The IBJA report cited China's central bank adding around 23 tonnes of gold to its reserves in September, its biggest monthly purchase since 2023. Such accumulation reflects efforts by monetary authorities to diversify reserves and reduce dependence on the US dollar.

Gold's role as a store of value, its liquidity and the absence of sovereign credit risk continue to support its appeal amid geopolitical uncertainty, according to Mirae Asset.

Can festive demand support prices?

The upcoming Indian festive and wedding season, covering Dhanteras, Diwali and weddings, could provide additional support to physical gold demand. However, higher prices may constrain jewellery purchases, making seasonal demand an uncertain price driver.

Mirae Asset remains constructive on gold over the medium to long term, citing central bank buying, geopolitical risks and reserve diversification. Its below-$4,200 assessment is an investment view, not a guaranteed price floor. Investors should account for volatility and consider gold's role within their overall portfolio allocation.

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