Gold price logs biggest fall in 6 years. Good opportunity to buy, say experts
Gold price on Friday on Multi Commodity Exchange (MCX) gained ₹198 and closed at ₹48,083 per 10 gm levels. However, this rise was not enough to pare its biggest fall in six years as the yellow metal ended year 2021 losing more than 4 per cent this year. MCX gold rate today at ₹48,000 levels is more than ₹8,000 lower from its all-time high of near ₹56,200 per 10 gm.
According to commodity market experts, gold price today is around ₹8,000 lower from its all-time high and the precious bullion metal has been able to attract buyers every time it dipped below $1800 levels. So, even during choppy trade last fortnight, gold price has bounced back sharply after profit booking in $1820 to $1835 range. They said that gold price outlook is currently decided by spot market and recent pattern indicates ‘sideways trend with positive bias.’ They advised gold investors to maintain ‘buy on dips’ as gold may go up to $1880 to $1900 per ounce levels in next 3 months. Gold experts said that yellow metal has taken strong support at $1760 per ounce levels and this support has remained intact for near one month. So, one should keep an eye on the broader range of $1760 to $1835 per ounce and follow the buy on dips strategy.
They said that MCX gold price today is priced above ₹48,000 per 10 gm and it has strong support at ₹47,500 levels. They said that ₹47,800 to ₹47,900 is a good buying range for short-term investors as the yellow metal may soon go up to ₹49,300 to ₹49,500 per 10 gm once there is ease Indian National Rupee (INR) against the US dollar (USD). They said that in last one fortnight, INR has appreciated by around ₹2 against the US dollar, that didn’t allowed MCX gold rate to hit ₹49,000 but the current levels of gold is a good opportunity for short term gold investors as demand for dollar is expected to pick up in New Year 2022.
Speaking on gold price outlook; Vice President — Commodity Research at Motilal Oswal said, “Gold price today in spot market is trading in $1760 to $1835 per ounce range and on the breakage of the above hurdle, it may soon go up to $1880 to $1900 per ounce levels. Overall, gold price outlook for short-term is sideways with positive bias as the yellow metal has managed to attract huge demand every time it came below $1800 levels in the spot market. As current gold price trade pattern indicates sideways trend with positive bias, my suggestion to short-term gold investors is to maintain buy on dips strategy.”
Highlighting the reason for MCX gold rate not appreciating despite positive signals from the spot market; Anuj Gupta, Vice President — Commodity & Currency Trade at IIFL Securities said, “Major reason for gold price in domestic market being choppy is rise in Indian rupee against the US dollar. In last one fortnight, Indian rupee has appreciated around ₹2 against the US dollar. This appreciation rupee nullified the rise in gold price in spot market.”
Anuj Gupta said that ₹1 rise against the USD lead to around ₹300 to ₹350 dip in MCX gold rate. As the Indian rupee has appreciated to the tune of ₹2 against the USD in Forex Market, around ₹600 to ₹700 rise in MCX gold rate got contained. However, Anuj Gupta of IIFL expected sharp rise in USD in New Year 2022 as demand for the dollar will pick up post-new year celebrations.
“It’s custom that forex traders square off their positions in US dollar and take fresh position in January post-new year celebrations. So, in second fortnight of each year, dollar dips against major global currencies and from second to third week of January, the US currency starts gaining its lost ground. So, from second week of January, rupee is expected to calm down against the US dollar that will support gold price rally in short term. So, one should buy gold at around ₹47,800 per 10 gm levels maintaining stop loss at ₹47,500 levels. In next, one month, the yellow metal may go up to ₹49,300 levels. However, if the gold price rally continues in spot market, it may go up to ₹51,000 to ₹51,500 per 10 gm levels by end of March 2022,” concluded Anuj Gupta of IIFL Securities.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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