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Gold price near 9-month high. Should you buy precious metal now?

Due to rising global inflation and dovish Fed outlook, Gold prices on MCX have crossed  ₹49,000 per 10-gram mark while the silver price is trading above 67,000 per kg, commodity experts said. (PTI)Premium
Due to rising global inflation and dovish Fed outlook, Gold prices on MCX have crossed 49,000 per 10-gram mark while the silver price is trading above 67,000 per kg, commodity experts said. (PTI)

  • Gold price may go up to 50,000 to 51,000 per 10 gm by the end of this year while silver price is expected to hit 72,000 to 74,000 per kg on MCX, market experts believe

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After sustaining above 49,000 per 10 gm levels on MCX (Multi Commodity Exchange), gold price on Thursday hit 9-month highs of 49,292. The appreciation in the yellow metal price continued further as the precious bullion metal closed at 49,346 per 10 gm, logging 0.26 per cent intraday gain on Friday. Silver price too went up 0.27 per cent and closed at 67,148 per kg on MCX.

According to commodity market experts, rally in gold and silver prices are expected to continue till year end. They said that rising global inflation and industrial consumption of gold and silver is going to remain for next few months more and hence both these bullion metals are expected to showcase sharp upside move till 2021 end. They said that gold price may go up to 51,000 per 10 gm on MCX while silver price may hit 72,000 to 74,000 per kg by the end of this year.

Speaking on the gold price outlook; Anuj Gupta, Vice President — Commodity & Currency Trad at IIFL Securities said, "Gold prices are rising due to the soaring global inflation, weak US data, rising industrial demand for gold and silver and investment demand for bullion. We are expecting these triggers to exist for next few months and hence this rally in gold and silver prices are also expected to continue till end of this year. Gold price may go up to 50,000 to 51,000 per 10 gm by the end of this year while silver prices are expected to hit 72,000 to 74,000 per kg on MCX."

Expecting further rally in gold and silver prices; Manoj Dalmia, Founder & Director at Proficient Equities Limited said, "Gold has given a significant breakout above $1835 per ounce, its August 2021 high. 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 (diagram attached)."

Manoj Dalmia said that the trend following oscillators MACD along with MACD-Histogram has generated buy signals and RSI (14) has also clocked its highest value since June on weekly time-frame. "So the trend is likely to continue & we expect Gold prices to ascend to even higher levels by December end," he added.

On how rising inflation may increase investment demand for gold and silver; Abhishek Chauhan, Head — Commodity & Currency at Swastika Investmart Ltd said, "Since the start of Covid-19 pandemic, global inflation is increasing rapidly. US Consumer price index has jumped 6.2 per cent in October compared with the previous year due to the surging cost of crude oil, gas and food. According to US CPI data, consumers' spending on goods and services has increased up to 4.6 per cent, which is the highest level of inflation seen in 1990 in the USA. Due to this rising global inflation and the dovish Fed outlook, Gold prices on MCX have crossed 49,000 per 10-gram mark while the silver price is trading above 67,000 per kg."

"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. Technically, Gold and Silver prices have resumed their uptrend and are likely to set for the new higher levels," concluded Abhishek Chauhan of Swastika Investmart.

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