Gold price retraces from life-time high. Buy or wait for more dip?

According to commodity market experts, gold and silver prices gained momentum after soft US CPI data and Moody’s recent decision to downgrade US credit rating from stable to negative worked as a catalyst for profit booking trigger in currency and bond market. This led to sharp decline in US dollar index and US treasury yields as investors started shifting money from currency and bond market to other assets including gold. 

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However, commodity market experts maintained that gold price today is facing hurdle at ₹62,000 levels while silver rate today is facing resistance at ₹73,500 per kg levels. Further upside in gold and silver prices can be expected only after a decisive breach of these hurdles.

What fuled gold price to recod high

Speaking on gold price rally in the week gone by, market expert Sugandha Sachdeva said, “Gold prices surged to a new record of ₹61,914 per 10gm this week, marking a weekly gain of 1.62 per cent, while silver experienced a substantial increase of 4.53 per cent. The rally in both the precious metals was fueled by diminishing expectations of further rate hikes by the US Fed. Following a correction that brought gold prices to around ₹59,500 per 10gm at the beginning of the week, the yellow metal attracted robust buying interest. Meanwhile, silver prices found support at the ₹69,000 per kg mark, which led to an impressive upward trajectory.”

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On triggers that helped gold price rally, Anuj Gupta, Head — Commodity & Currency at HDFC Securities said, “After soft US inflation data, sharp correction was witnessed in US dollar and US treasury yields. US dollar index has come below 104 levels whereas US treasury yield came close to 4 per cent. This sparked buying interest in bullions.” He said that US dollar index may come close to 100 levels once it breaches its current support placed at 103 levels.

Asked about the MCX glitch that led to sharp rise in gold price on Thursday, Anuj Gupta said that technical chart suggests that 733 lots of MCX gold were traded around ₹61,914 levels.

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“The significant corrective wave observed in the dollar index during the week acted as a catalyst in boosting the entire bullion complex. Moody’s recent decision to downgrade the US credit rating outlook from stable to negative highlighted the economic risks that could cloud the outlook of the US economy, adding to the safe-haven appeal of precious metals. Additionally, the US Consumer Price Index (CPI) eased to 3.2 per cent on an annual basis in October, compared to 3.7 per cent in September. Jobless claims rose for the fourth consecutive week, and industrial production data for October fell below expectations. A softer-than-expected inflation print and a cooling labour market, fuelled optimism that the US central bank may have concluded its rate-hiking program,” said Sugandha Sachdeva.

Triggers to look at

Speaking on gold and silver price outlook, Sugandha Sachdeva said, “Looking ahead, the price outlook remains firm for both metals, although some profit booking is quite likely. Gold prices face resistance at the ₹62,000 per 10 gm or $2,000 per ounce mark, while silver prices are seen encountering a hurdle at ₹73,500 per kg or $24 per ounce level. The market will be closely monitoring the minutes of the Fed’s last meeting scheduled for next week. A convincing move above the mentioned resistance levels would signal further upside momentum in both gold and silver prices.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.

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Updated: 18 Nov 2023, 07:06 AM IST