Gold prices may have peaked out, can fall 12-15% in dollar terms: Quant Mutual Fund

Despite May’s seasonal bullish bias, Quant Mutual Fund’s analytics indicate that gold may have already reached a top and has potential to correct by 12-15% in dollar terms. “However, our medium-term and long-term views are equally constructive and we reiterate that a meaningful percentage of your portfolio should be dedicated towards precious metals,” according to the monthly release by Quant Mutual Fund.

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For glittering Gold and indispensable oil, the fund house expects a correction in the near term, Gold has exhibited tremendous potential and that potential remains for the longer term and also crude oil’s downside is exhausted.

May month is generally perceived as a profit-booking zone and 2025 may not be very different as compared to previous years’ history and after sharp corrections in the US, a pullback rally is on cards as US volatility indices have spiked.

The global equity flows towards the US equity have peaked out in January 2025 and ever since then the global investors are reducing their exposure in the US. “Therefore, an important high is in place in US equity and the Nasdaq in particular. Although a near-term pullback is probable, the medium-term trend is still weak and the next few months will be quite challenging for global equity and U.S. equity in particular,” the release said.

Signaling a sharp rally in US tech stocks the fund house cautions a sharper fall again and the ongoing correction globally is in a consolidation phase and not in bear market territory as perceived by disheartened investors.

“For a deep bear market hypothesis, we require tighter global liquidity and currently global liquidity remains relatively quite strong,” said the fund house.

Quant Mutual Fund further mentioned their portfolio composition by saying that their portfolio remains tilted towards large and mega large caps and overall liquidity of the portfolio is good and additionally the high cash levels in most of our schemes have been deployed in select small caps.

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The fund house adds that the pessimism phase in its first leg and equally ugly bottom is pending but near-term rise is on the cards for US equity. The global liquidity metrics have started deteriorating, the risk-off phase for US will continue and the analytics endorses risk-on for India and risk-off for US both on absolute and relative basis.

For currencies, Quant Mutual Fund continues to watch out for global currencies and global yields, as they will dictate the 2025 macro outlook. Although the DXY index has corrected quite meaningfully since January highs, it seems to be bottoming out at around current levels and a pullback rally is on the cards as May month is seasonally bullish for DXY and currently at an important inflection point.

Commenting on crude oil and Bitcoin, the fund house says that downside is already exhausted in NYMEX crude and May month is also a seasonally bullish month but upside could be meaningful if EM current marginal risk-on phase magnifies. “Though for Bitcoin, the month of May is generally flat to bearish but our analytical tools are endorsing a bullish outlook with current global uncertainties, it would be an ideal investment for high-risk appetite global investors,” the release says.