Gold prices have experienced a significant correction, falling 24.6% from their 2026 all-time high of $5,417 per ounce. This decline has prompted Mirae Asset Mutual Fund to suggest that current international gold prices below $4,200 per ounce present a compelling investment opportunity.
Factors Driving the Gold Price Correction
According to Mirae Asset's October 2026 outlook, the primary drivers behind this recent downturn are rising US Treasury yields and expectations of further monetary tightening. The US 10-year Treasury yield, for instance, climbed to 5.27% as of October 6, 2026, up from approximately 4.1% a year prior. Higher bond yields diminish gold's appeal, as the precious metal does not offer interest income.
Additional pressures include the anticipation of interest rates remaining elevated for an extended period, a strengthening US dollar, and profit-booking activities following rallies in 2025 and 2026. Despite these factors, Mirae Asset views this correction as cyclical rather than an indication of deteriorating long-term fundamentals for gold.
Strong Fundamentals Support Long-Term Gold Outlook
Despite the short-term volatility, several robust factors underpin a positive long-term outlook for gold. Central bank purchases continue to be a significant demand driver. Mirae Asset anticipates central bank gold acquisitions to remain around 700 tonnes in 2026, notably higher than the annual average of 470 tonnes between 2010 and 2021.
Survey findings cited by the fund house indicate that 89% of central banks expect global gold reserves to increase, with 45% planning to augment their own holdings. China's central bank, for example, added approximately 23 tonnes of gold to its reserves in September, marking its largest monthly purchase since 2023. This trend reflects a broader effort by monetary authorities to diversify reserves and lessen reliance on the US dollar.
Geopolitical Uncertainty and Gold's Enduring Appeal
Gold's traditional role as a store of value, its inherent liquidity, and the absence of sovereign credit risk continue to enhance its appeal, particularly amidst ongoing geopolitical uncertainties. These attributes position gold as a safe-haven asset during times of global instability.
Indian Festive Demand: A Potential Catalyst
The upcoming Indian festive and wedding season, encompassing events like Dhanteras and Diwali, could provide additional support for physical gold demand. However, the impact of seasonal demand on prices remains uncertain, as higher prices might temper jewellery purchases.
Mirae Asset maintains a constructive stance on gold over the medium to long term, emphasizing the enduring support from central bank buying, geopolitical risks, and reserve diversification efforts. While viewing prices below $4,200 as an investment opportunity, the fund house cautions investors to account for potential near-term volatility and consider gold's strategic role within their broader investment portfolios.