According to analysts, long-term fundamentals including central bank gold purchases, geopolitical concerns, and prospects of lower interest rates continue to boost bullion despite the short-term decline.
At 10.33 am, gold mini November futures were trading at Rs 1,21,873 for 10 grams on the Multi Commodity Exchange (MCX), up 0.66 percent. Additionally, silver mini November futures increased, going up 0.38 percent to Rs 1,48,148 per kilogram.
The previous day, silver and gold mini futures had finished at Rs 1,47,583 and Rs 1,21,069, respectively. These little increases are insufficient to counteract this week’s precipitous worldwide drop.
Gold is under pressure globally as it approaches the $4,000 per ounce mark. Following a protracted surge to record highs, investors became cautious, which caused the metal to decline.
The price of spot gold has dropped by 0.5 percent. After hitting historically overbought levels, gold saw a steep drop of 385 points (8 percent) from its most recent top, suggesting a possible trend reversal. Tejas Shigrekar, Chief Technical Research Analyst-Commodities and Currencies at Angel One Ltd., said that Monday’s finish was the highest monthly Relative Strength Index (RSI) ever seen, signaling the end of bullish momentum and paving the way for a corrective phase.
The conclusion of India’s festival season means that seasonal physical demand would likely slow down, making prices susceptible.
“We expect further declines in November and December. In anticipation of more declines in the next months, traders are increasing their exposure to put options since investor mood has changed, according to Shigrekar.
Extended play
The opportunity cost of storing non-yielding assets like gold has decreased as a result of real rates falling due to expectations of more interest rate reduction by the US Federal Reserve this year.
According to Augmont’s director of research, Renisha Chainani, investors are increasingly seeing gold as a safe haven in light of a weaker monetary climate.
Globally, central banks have been buying gold at much higher rates, especially in Asia and the Middle East. According to Chainani, strategic accumulation by central banks—including those in China, Russia, and India—signaled trust in gold as a reserve asset, tightening the market and giving prices significant support.
It is anticipated that international gold, which is now trading around $4,080, will find support close to $3,800 and drop even lower at $3,670. Shigrekar said that only a sustained advance over $4,260 would reverse the present negative tone, with resistance most likely located around $4,190.
Long-term fundamentals including central bank gold purchases, global geopolitical concerns, and prospects of lower interest rates continue to underpin bullion despite the short-term slump, according to experts.
Long-term investors should not go in everything at once, but rather build up over time on declines. According to them, a wise way to manage volatility is still to have systematic exposure via sovereign gold bonds or gold and silver exchange-traded funds (ETFs).