New Delhi, Feb. 3 -- After a blistering rally over the past year, gold prices are starting to see sharp corrections. Since the record high on 28 January, global gold prices have fallen over 12%. But on Tuesday, it bounced back sharply.

Here is a guide to the global macroeconomic factors that are driving down prices of the precious metal, and how investors should think about gold in their portfolios in light of this correction.

1) How are gold prices behaving worldwide?

Historically, a weaker dollar has lifted gold prices while a stronger dollar has weighed on gold as it is a dollar-denominated asset class. Donald Trump's nomination of Kevin Warsh to succeed Jerome Powell as head of Federal Reserve has reduced policy uncertainty and als...