Gold is bouncing back. Is now the time to dig in for big returns?

livemint.com:

Subscribe to enjoy similar stories. The last few weeks have been a roller coaster ride for gold. A breathtaking rally to new highs followed by a bone-crunching decline in double quick time.

The volatility could spook an average investor. But as Colonel Hannibal Smith (Liam Neeson) often advocates in the Hollywood blockbuster The A-Team – “no matter how random things may appear, there is always a plan!" Nothing happens in financial markets without a reason, and the reason is always financial. The wild ride in gold is going as per plan.

The plan is to shake off weak hands and accumulate gold on declines. On 1 October 2024, we wrote that a decline in gold and silver prices would be a welcome development. Read here: Gold prices may fall in the coming months. Here’s why that’s great news. Sure enough the upward momentum snapped and gold fell from its peak of $2,790 per ounce reached on 30 October 2024 to $2,537 on 14 November 2024.

While the 9% fall in a fortnight may be jarring for many new investors who have jumped late on the bandwagon, it need not be so. The most critical outcome determining variable in combat is the element of surprise. Many a battle has seen reversal of fortunes of armies enjoying pole position because they were taken by surprise.

Trading is the warfare of a passive variety. We traders use keyboards and mice instead of swords and shields. But the outcome is equally brutal for the loser.

An earlier article had prepared readers for this element of surprise. Read here: How low could gold go? The recent dip in gold price to the $2,537 per ounce mark has not even tested the first 31.8% Fibonacci support level of $ 2,482 mark. That could mean bulls are unwilling to let prices fall significantly and are