Gold, silver price retraces from life-time high. Buy or wait for more dip?

Gold rate today: Gold and silver prices witnessed profit booking in the week gone by after the better than expected US inflation data and rebound in the US dollar rates. Gold price on MCX (Multi Commodity Exchange) for June 2023 expiry ended at ₹60,898 per 10 gm levels, around 1.55 per cent lower from its life-time peak of ₹61,845 per 10 gm.

Likewise, silver price on MCX finished at one month low of ₹73,100 per kg, logging near 7.10 per cent correction from its record high of ₹78,292 per kg levels. In international market, gold rate today is near $2,010 per ounce whereas silver rate today is around $24 per ounce.

According to commodity market experts, weak US inflation data helped US dollar rebound from its one-month low, which put gold and silver price under pressure. They said that gold is facing resistance at ₹61,500 per 10 gm levels whereas silver rate today is struggling at ₹78,000 per kg levels. Expecting pull back from support levels, experts said that weak economic readings from China and the US may continue to support gold and silver price and hence one should continue to maintain 'buy on dips' strategy while investing in bullions.

On why gold and silver rate today are under pressure, market expert Sugandha Sachdeva said, "Gold prices experienced a volatile week, with prices surging close to record highs before giving up some gains to close marginally higher by 0.43 per cent. The key factor influencing prices was the US CPI reading, which showed a slight cooling off in April on a year-on-year basis, but monthly inflation rose in line with expectations, indicating persistent price pressures. These reduced wagers of interest rate cuts by the US Fed towards the end of the year and caused a downward drift in precious metal prices. Additionally, a rebound in the dollar index also weighed on gold prices."

Speaking on the US and Chinese economic readings, Nirpendra Yadav, Senior Commodity Research Analyst at Swastika Investmart said, "Crude oil prices are under pressure due to demand concerns amid fears of recession, which is being reflected in inflation data from the US and China. US inflation registered a month-on-month increase while year-on-year inflation declined from 5 percent to 4.9 percent. China's year-on-year inflation has also seen a sharp decline. However, with US inflation remaining above the Fed's target and signs from the Fed that higher interest rates will continue for the next few months, gold has slipped from all-time highs to $2,010 an ounce in Comex futures."

US debt limit in focus

Expecting bounce back in gold and silver prices, Sugandha Sachdeva said, "While gold found resistance at the crucial ₹61,500 per 10 gm mark, silver reversed course after testing a new record high of ₹78,292 per kg mark, struggling to sustain above the crucial hurdle of ₹78,000 per kg mark. However, concerns about the US debt limit deadlock and weak economic readings from China and the US continue to support prices, while pushing up safe-haven demand for gold."

Gold, silver price outlook

Asked about the outlook of gold and silver price, Sugandha Sachdeva said, "Looking ahead, precious metal prices are expected to witness sharp volatility, with movements in the dollar index being a key variable to watch out for. Gold is still in an uptrend, where it has near-term support at ₹60,500 per 10 gm mark, and is also holding well above the psychological $2,000 per ounce mark in the international markets, while silver has immediate support at ₹71,000 to ₹69,500 per kg zone. If these key levels hold, prices of both the metals are likely to experience a strong upside momentum, but a convincing breach on the downside could cause a dent in precious metal prices."

Sugandha said that a move past ₹61,500 per 10 gm mark would be bullish for gold, while for silver, a closing above ₹78,000 per kg mark would open the door towards ₹80,000 per kg mark."

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.