Despite the traditional seasonal bullish bias for May, Quant Mutual Fund’s latest analytics suggest that gold prices may have already peaked, with a possible correction of 12-15% in US dollar terms anticipated in the near future.
In its monthly market outlook, the fund reiterated a positive medium- to long-term stance on precious metals. “A meaningful portion of investors’ portfolios should continue to be allocated to precious metals,” the report advised, emphasizing gold’s strong potential beyond the short-term correction.
Alongside gold, the fund also expects a short-term correction in crude oil prices. While oil’s downside appears to have largely been exhausted, both commodities remain well-positioned for growth over the medium term.
Historically, May is known as a period of profit-taking, and 2025 is expected to follow this pattern. After sharp market corrections in the United States, a pullback rally seems likely as US volatility indices have risen.
Quant Mutual Fund highlighted that global equity inflows into the US peaked in January 2025. Since then, international investors have been reducing their US exposure. “An important high is in place in US equities, especially in the Nasdaq. While a near-term rebound is possible, the medium-term outlook remains weak, and the coming months are expected to be challenging for both global and US equities,” the report stated.
Though the fund anticipates a sharp rally in US technology stocks, it warns of the potential for a subsequent steep decline. The ongoing global market correction is currently seen as a consolidation phase rather than a full bear market, contrary to concerns expressed by some investors.
“For a sustained bear market to develop, we would need tighter global liquidity conditions. At present, global liquidity remains relatively strong,” the fund noted.
Regarding portfolio strategy, Quant Mutual Fund continues to favor large and mega-cap stocks, maintaining good overall liquidity. Recently, the fund has deployed high cash reserves into select small-cap stocks, signaling confidence in this segment.
The fund also indicated that the initial phase of market pessimism has passed, but a deeper market bottom is still forthcoming. Near-term gains in US equities are expected; however, deteriorating global liquidity metrics suggest a prolonged risk-off environment for US markets. Conversely, the outlook favors a risk-on approach for India, both on an absolute and relative basis.
On currencies, the fund remains focused on global currency movements and yield trends, which it sees as key drivers of the 2025 macroeconomic landscape. Although the US Dollar Index (DXY) has declined significantly from January highs, it appears to be stabilizing near current levels. May is traditionally a strong month for the DXY, and a pullback rally is anticipated as the index sits at a crucial inflection point.
Turning to commodities, the fund notes that NYMEX crude oil’s downside is largely played out. May is also seasonally bullish for oil, with the potential for substantial upside if emerging market risk-on sentiment strengthens.
For Bitcoin, while May has historically been flat to bearish, Quant Mutual Fund’s analytical tools are signaling a bullish outlook. Given current global uncertainties, the cryptocurrency could be an attractive investment option for high-risk appetite global investors.
