Gold rates dip over ₹1500 this week. Opportunity to buy before Diwlai?

According to commodity market experts, surge in dollar index is the major reasons for gold price tumble this week. However, US CPI data brought some relief rally in the yellow metal price but the data was not enough to sustain long and Friday fall in precious metal’s price has to be seen from this angle. They said that due to hawkish sentiments in regard to US dollar, people are swapping their positions from gold to dollar. They went on to add that due to strong US dollar gold prices are expected to remain sideways and it may trade in $1,640 to $1,700 per ounce range. On breaching of $1,640 support, spot gold price may go up to $1,600 levels. On MCX, gold prices are expected to trade in ₹50,200 to ₹51,500 range till Diwali.

Speaking on gold price outlook, Amit Sajeja, Vice President — Research at Motilal Oswal said, “Gold prices have slumped due to spike in dollar index though market has almost discounted the 75 bps interest rate hike expected in upcoming US Fed meeting scheduled on 2nd November 2022. However, some relief rally was witnessed after the US CPI data but it was not enough to pare the pressure created by the rising US dollar.”

On why rising dollar has put yellow metal under pressure, Anuj Gupta, Vice President — Research at IIFL Securities said, “Due to hawkish sentiments on the US dollar, investors are fishing out their money from gold and switching to forex market and buying US dollar. Due to this swap of positions by investors, gold price is sliding. However, we are expecting some surprise from the US Fed meeting as the US President and some US Fed officials have raised concern in regard to rising inflation. They have said that US Fed rate hike has failed to contain inflation and hence they might decided some other way to contain inflation and the US Fed may change its stance on interest rate hike in its upcoming meeting.”

Asked about gold price outlook till Diwali both experts said that yellow metal is expected to remain sideways and any dip towards $1640 in spot market and ₹50,200 on MCX should be seen as buying opportunity by aggressive investors. They said that on breaching of ₹50,200 levels on MCX gold price may go up to ₹49,300 levels whereas in spot market, next support below $1640 is placed at $1600.

Amit Sajeja of Motilal Oswal said, “Till Diwali 2022, gold price is expected to remain range bound and high risk traders can buy gold at around $1640 levels in spot market. On MCX, high risk traders can buy gold at around ₹50,200 levels for the target of ₹51,300 to ₹51,500 per 10 gm levels.”

Advising ‘buy on dips’ strategy ahead of Diwali 2022, Anuj Gupta of IIFL Securities said, “Spot gold price is trading just above its support of $1640. On breaching of this levels, it may go around $1600 per ounce levels. So, high risk investors can buy above $1640 levels if it opens above $1640 levels on Monday. But, they need to maintain stop loss below $1640 levels. In case the stop loss triggers, they are advised to take position around $1610 levels maintain stop loss below $1600 levels. On MCX, one can buy gold at current levels if it opens and sustains above ₹50,200 levels. From current levels, it may go up to ₹51,500 levels by Diwali 2022. However, in case the yellow metal opens below current levels, then buyers are advised to buy around 49,500 to ₹49,300 levels maintaining stop loss at ₹48,800 levels.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.