Yellow metal dips ₹4000 from recent high. Should you buy?

According to commodity market experts, progress in Russia-Ukraine peace talks and US Fed’s hawkish stance on interest rate hike may work as booster dose for bears in near term but global inflation worries are expected to exist in medium to long term. They said that immediate support for gold is pegged at $1880 to $1900 per ounce and has immediate resistance at $1934 levels.

Highlighting the reasons that led to fall in gold price across globe; Sugandha Sachdeva, VP — Commodity & Currency Research at Religare Broking Ltd said, “Sentiments turned bearish for the metal earlier in the week as Russia promised to scale down military operations around Kyiv. However, there is still a lot of skepticism with no signs of solid de-escalation, which further supported the precious metal around the psychological level of $1900 per ounce mark, amid a flight to safety. Besides, Russian President Vladimir Putin stepped ahead to counter Western sanctions by threatening to halt gas supplies to foreign buyers unless they switch to payments in rouble, which has escalated tensions further.”

On various triggers and its impact on spot gold price, Sugandha Sachdeva of Religare Broking said, “There is a lot of nervousness that the US Fed’s hiking cycle to stamp out decades-high inflation could have adverse effects on the US economic growth, which is underpinning gold prices to a large extent. Euro Zone inflation also surged to a record 7.5 per cent in March as compared to a revised figure of 5.9 per cent in February, another positive trigger for prices. The precious metal however didn’t react much to the much-awaited US jobs report for March as the non-farm payrolls number came in close to the market expectations, even as the wage gains accelerated. This could however drive the Fed towards a 50 bps rate hike at its next meeting and cap gains.”

On what technical chart suggests in regard to spot gold price today; Vidit Garg, Director at MyGoldKart said, “Gold prices have fallen this week after ease in Russia-Ukraine crisis and correction in bond yields from the 3 years high. But technically, until spot gold price trades above $1934 per ounce levels, we can not state that bear phase is over. Any bounce back in gold price may come as correction in downside trends if it fails to sustain above $1934 levels. On breaching current support of $1880 levels, spot gold price may go further down at around 1860 levels.”

Advising buy on dips strategy to medium and long term investors; Sugandha Sachdeva of Religare Broking said, “In contrast to the weekly loss, gold witnessed its biggest quarterly gain since September-2020, as the Russia-Ukraine conflict remained at the center stage while growing inflation also led to rising investment demand for gold as an inflation hedge. Considering the mixed factors playing out, prices might witness some more pressure, but we advise maintaining a buy-on-dips approach in gold, where immediate support is pegged at the $1880-1900 per ounce zone, while the key hurdle is seen around the $1970 per ounce mark. Only a convincing breach of the mentioned resistance would lead to significant upside momentum in prices.”

Sharing major levels for gold buyers in domestic market; Anuj Gupta, Vice President at IIFL Securities said, “MCX gold price today is standing at support zone of ₹50,500 to ₹50,800 per 10 gm levels. On the upper side, it is facing resistance at ₹52,400 to ₹52,800 per 10 gm zone. In spot market, if the gold price sustains above $1960 levels then we can expect it to go up to $2,000 per ounce levels and bulls can outplay bears in that scenario.”

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