Gold price dips after hitting 9-month high. Should you buy now?

According to commodity market experts, triggers for gold price are unchanged as Fed is still maintaining its dovish stance on interest rate increase whereas global inflation and bad US data are still there. They said that on MCX, December contract is expiring on 3rd December. So, those who have position in this December future contract are exiting their build-up holdings. They advised gold investors to maintain ‘buy on dips’ strategy in both gold and silver as gold is expected to hit ₹50,000 to ₹51,000 by the end of this year while silver may scale up to ₹74,000 per kg by end of 2021.

Speaking on the gold price triggers; Anuj Gupta, Vice President — Commodity & Currency Trade at IIFL Securities said, “Gold and silver prices have fallen due to profit-booking as triggers like US Fed’s dovish stance on interest rate increase, soaring global inflation, rising industrial demand for gold and silver and bad US data are still existing. Actually, gold price in international market is trading in the range of $1830 to $1880 per ounce levels. Gold price may show uptrend after breaking the upper hurdle of $1880 per ounce on weekly closing basis. In that case it may go up to $1960 to $1980 per ounce levels in the international market.”

Expecting trend reversal in gold price; Manoj Dalmia, Founder & Director at Proficient Equities Limited said, “Gold price has given breakout at $1835 per ounce levels and it is still above this level. This breakout in demand coincides not only with the multi-decade high value in Consumer Price Index in the US but also fits nicely with seasonality pattern, which shows that the months of December and January have been traditionally bullish for Gold.”

Speaking on the reasons that may bring trend reversal in gold and silver price; Abhishek Chauhan, Head — Commodity & Currency at Swastika Investmart Ltd said, “Global inflation is increasing due to supply bottlenecks across the world increasing the prices of essential commodities including food grains, edible oil, metals, and power supply. This bottleneck of supply is not expected to clear soon and it may take more than a year to become everything as normal as it was during the pre-pandemic level. However, industrial consumption is also increasing which may give an edge to Silver prices with an uptrend in Gold.

Asked about gold price target on MCX, Anuj Gupta of IIFL Securities said, “Gold has strong support at ₹47,900 levels on MCX. One should buy gold at around ₹48,500 levels for short-term target of ₹49,800 per 10 gm price.” He said that current gold future contract on MCX is expiring on 3rd December and people are squaring off their build-up holding. This is also a reason for gold price fall in recent sessions. However, by end of this year, we are expecting gold price to hit ₹50,000 to ₹51,000 per 10 gm whereas silver price is expected to hit ₹72,000 to ₹74,000 per kg on MCX.”