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Gold prices in India have fallen below  ₹49,500 per 10 gram
Gold prices in India have fallen below 49,500 per 10 gram

Gold prices crash nearly 7,000 in over a month. Good time to buy?

  • Some analysts say that investors can look to buy gold in tranches for better entry levels
  • Gold prices have fallen sharply over the past one week amid a rebound in US dollar

The recent fall has taken gold prices to below 49,500 per 10 gram as compared to record highs of 56,200, hit on August 7. Silver also has suffered a big fall. The while metal has fallen below 58,000 per kg as compared to last month's high of about 80,000. A rebound in US dollar has been attributed the the current leg of fall in precious metals.

The recent price drop has triggered a slight uptick in retail demand in India, Reuters reported, citing a dealer.

After the price drop, some analysts say that investors can look to buy gold in tranches for better entry levels.

“Many are waiting for a dip in gold and silver prices from the last few days after the recent run-up. Gold has corrected from highs of 57,000 to current price of 49500, while silver has corrected from 78,000 to 58,000," said Navneet Damani, VP – Commodities Research, Motilal Oswal Financial Services.

"Both the metals still look very attractive given the macro backdrop and other fundamentals supporting them. Gold is a stable one, while silver is the volatile one - so choose what you want to invest into," he said.

"One can look to buy gold on dips towards Rs.47500-48000 with upside targets towards Rs.65000-67000 over the next 18 months. Similarly for silver - look to add between 55000-58000 with a potential target towards 80000-88000 over the next 18 months," he added.

In global markets, spot gold prices today traded at around $1,860 an ounce after a sharp correction last week.

Hareesh V, Geojit Financial Services' head of commodity research, said that rising US-China tensions and hopes of fresh economic stimulus measures may continue to offer lower level support to gold.

"A rally in the US dollar and optimism over Covid vaccine is weighing on the safe haven demand of gold and thus the price of the commodity. However, at the same time, uncertainty prevails in the metal ahead of the first presidential election debate in the US this week," he added.

"Weak sentiments continue to take prices (London spot gold) lower towards the support of $1840 and likely is to trigger a rebound. An unexpected drop below $1820 would extend further selling pressure later," he said.

HDFC Securities in a note said that gold October prices have near term resistance at Rs. 51000 per 10 grams and support at Rs. 48600 per 10 gram.

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