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 the soft US IPT data and Moody’s recent decision to downgrade the US credit rating from stable to negative acted as a catalyst for a profit-booking trigger in the currency market and bonds. This led to a sharp drop in the US dollar index and US treasury yields as investors began to shift money from the currency market and bonds to other assets including gold.

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However, experts in the commodity market argued that the price of gold today is facing obstacles ₹62,000 level and today cash rate is facing resistance at ₹73,500 per kg levels. Further grounding in gold and silver prices can only be expected after a decisive breach of these barriers.

What drove the price of gold to a record high

Speaking on the gold price rally in the past week, market expert Sugandha Sachdeva said, “Gold prices rose to a new record of ₹61,914 per 10gm this week, showing a weekly gain of 1.62 percent, while silver saw a significant increase of 4.53 percent. The rally in both precious metals was fueled by reducing expectations for further rate hikes by the US Fed. After a correction that brought gold prices approx ₹59,500 per 10gm at the start of the week, the yellow metal attracted strong buying interest. Meanwhile, silver prices were supported by the ₹69,000 per kg mark, resulting in a significant upward trajectory.”

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On triggers that helped gold prices rally, Anuj Gupta, Head — Commodities & Currencies at HDFC Securities said, “After the soft US inflation data, a sharp correction was seen in the US dollar and US treasury yields. The US dollar index fell below 104 levels and US Treasury yields neared 4 percent. This has stimulated buying interest in bullion.” He said the US dollar index could approach 100 levels when it breaks its current support placed at 103 levels.

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

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“The significant corrective wave seen in the dollar index during the week acted as a catalyst to boost the entire bullion complex. With Moody’s recent decision to downgrade the US credit rating outlook from stable to negative, the economic risks that could cloud the outlook in the U.S. Also, the U.S. Consumer Price Index (CPI) eased to 3.2 percent on an annual basis in October, compared to 3.7 percent in September. week, and industrial production data for October fell below expectations. A softer-than-expected inflation print and a cooling labor market fueled hopes that the US central bank could end its rate-hiking program ,” said Sugandha Sachdeva.

Trigger to look at

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

Disclaimer: The above opinions and recommendations are the opinions and recommendations of individual analysts or brokerage firms, and are not the opinions of Mint. We encourage investors to check with certified experts before making any investment decision.

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Updated: 18 November 2023, 07:06 AM IST