Home / Markets / Commodities /  Gold rates dip from week's highs. Is it an opportunity for bargain buyers?

Gold rates slipped during the early part of the week gone by, but managed to recover later and closed almost flat for the week. December gold future contract on Multi Commodity Exchange (MCX) ended 131 lower at 52,540 per 10 gm levels on Friday whereas spot gold price finished at $1,754 per ounce levels. According to commodity market experts, China re-imposing Covid restrictions after record high infection is likely to hurt growth outlook of world's largest gold consumer and demand for the yellow metal. They advised gold investors to wait for the correction before riding the next wave of upside in precious metal prices.

On reasons for gold price correction on weekend, Sugandha Sachdeva, Vice President — Commodities & Currency research at Religare Broking said, "The minutes of the last Fed meeting released during the week indicated a slightly less hawkish tone of the US central bank. This led to a bout of optimism in the markets as officials seem inclined towards the need for a slower pace of rate hikes going forward. The US inflation seems to have peaked and economic momentum is slowing down. Besides, the dollar index slid by more than 1 per cent towards a seven-week low which underpinned gold prices."

The Religare expert went on to add that China has re-imposed some Covid restrictions due to record-high infections which is likely to have a negative impact on the growth outlook of the world’s largest gold consumer and hurt demand for gold.

On triggers that may boost bulls' sentiment in upcoming sessions, Nirpendra Yadav, Senior Commodity Research Analyst at Swastika Investmart said, "Demand for the precious metal is expected to pick up again in the coming months as the dollar retreated from its 22-year high and global economic conditions worsened due to rising inflation. Growing Covid-19 infections in China, along with weakness in the Purchasing Managers Index (PMI) of major economies like the US and Japan last week, is boosting safe-haven demand. The demand for gold remained strong due to the wedding season in India."

Asked about pivot levels in regard to MCX gold price, Sugandha Sachdeva of Religare Broking said, "Prices last week faced a stiff hurdle at 53,200 per 10 gm mark and edged slightly lower. Looking ahead too, the 53,000 to 53,200 per 10 gm zone is likely to restrict upside move in the precious metal, and unless that is pierced, further upside looks implausible. Investors can wait for a correction in the precious metal before riding the next wave of upside momentum in prices."

Triggers that may dictate gold rates next week

Highlighting upon the gold price triggers that may dictate yellow metal prices next week, Nirpendra Yadav of Swastika Investmart said, "Fed chief Powell's speech on the economy and labor market, US payroll data, China, and Japan's manufacturing PMI data, and OPEC countries meeting will be important for precious metal's movement next week."

Gold price outlook

Swastika Investmart expert went on to add that gold prices may remain in a range-bound range this week due to the expiry in December futures. Gold future contract for February 2022 has support near 52,300 and resistance at 53,700. March futures silver has support at 61,500 and resistance at 64,500 levels.

Speaking on gold price outlook, Sugandha Sachdeva said, "There can be a decline in prices towards 51,500 per 10 gm mark which shall act as good support area and attract buying interest. In the international markets too, the level of $1785 per ounce mark is acting as a stiff hurdle, and prices look poised to test lower levels of around $1,700 per ounce. Market participants are now looking forward to the key US jobs report for November, which will provide further cues before the December policy meeting of the US Fed and shall set the course for gold prices in the near-term."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

Asit Manohar
Chief Content Producer at Live Mint Digital Team
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