Gold prices have peaked out, correction coming in two months; here's why

Quant Mutual Fund has issued a forecast indicating that gold prices have likely peaked and could experience a correction of 12-15% in dollar terms over the coming two months. Despite this short-term outlook, the fund remains optimistic about the medium and long-term prospects for precious metals, suggesting they should still comprise a significant portion of investment portfolios. Additionally, June is anticipated to be a bullish month for crude oil, with potential gains of 10-12%, especially if the emerging markets risk-off phase intensifies.

The fund's analysis suggests that global equities, although in a consolidation phase, are not entering a bear market as some investors fear. The near-term pullback has been observed, but challenges persist for global and US equities in the medium-term. Quant Mutual Fund notes that the hypothesis of a deep bear market would typically require tighter global liquidity, which is currently not the case as liquidity remains robust. The DXY index, having corrected significantly since January, appears to be stabilising, with a potential pullback rally anticipated.

Quant Mutual Fund continues to identify select buying opportunities in sectors such as PSU, Infrastructure, Hotels & Hospitality, Pharmaceuticals, Materials, Retail, and Telecom. The fund's 'Predictive Analytics' models have been predicting the close of the corrective phase in Indian equity, aligning with their repeated assertions over past months. These insights underscore the presence of strategic opportunities in specified sectors, even as broader market challenges persist.

It further said that, “Investors worldwide, and in India, should aim to have a healthy mix of assets in their portfolio.”

The predictive analysis of the fund house endorses the risk-on for India and risk-off for the US both on absolute and relative basis and global liquidity metrics have started deteriorating and the risk-off phase for the US will continue while liquidity is rising. “The DM economy is already in recession, but it is now certain that EMs will outperform DMs in the medium-term,” it added.