Gold, silver price retraces from life-time high. Should you buy in this correction?
Gold rate today has strong support placed at $1,975 per ounce levels in international spot market, say experts
PremiumGold rate today: After climbing to a new peak in the week gone by, both gold and silver prices witnessed profit booking on the weekend sessions. Retracing from its new peak of ₹61,845 per 10 gm, gold future contract for June 2023 in Multi Commodity Exchange (MCX) ended at ₹60,636 levels whereas silver rate today on MCX is ₹1,276 per kg away from its new peak of ₹78,292 per kg that it climbed on Friday. Gold rate today in New Delhi is ₹62,040 per 10 gram. As per the HDFC Securities, gold rate in Delhi fell ₹160 per 10 gm on Friday (by 9:00 PM).
According to commodity market experts, gold and silver prices retraced from its respective new peaks after strong US non-farm payrolls data, which triggered profit booking when the weekend session was about to end. They said that immediate support for gold rate today is placed at $2,010 per ounce levels in international market. They went on to add that immediate support for silver rate today is placed at $25.40 per ounce levels. However, they maintained that weakness in US dollar and looming economic slowdown in the US are going to provide support to gold rush and hence this dip can be a good opportunity for bargain hunters as buying around support levels is advisable.
US non-farm payrolls data in focus
On why gold and silver prices have fallen from its life-time highs, Anuj Gupta, Vice President — Research at IIFL Securities said, "Gold and silver rates retraced from its respective peaks on the weekend session after strong non payroll data announcement by the US administration. The US Bureau of Labor Statistics reported on Friday that total nonfarm payroll employment rose by 2,53,000 in April, and the unemployment rate changed little at 3.4 per cent."
Anuj Gupta of IIFL Securities maintained that gold rate today has immediate support placed at $2,010 per ounce levels whereas its major support is placed at $1,980 to $1,975 per ounce levels. similarly, silver rate today has immediate support placed at $25.40 levels whereas major support for the while metal is placed at $24.60 per ounce levels.
Echoing with Anuj Gupta's views, market expert Sugandha Sachdeva said, "US non-farm payroll data for April was quite upbeat indicating a robust labor market. This led to a surge in the US treasury yields and triggered some profit booking in the precious metal towards the close of the week. Furthermore, the latest report by WGC suggests that global gold demand declined by 13 percent (YoY) in the first quarter of 2023 which weighed on prices to some extent.
Decline in demand
On how lower demand hit gold and silver prices, Colin Shah, MD at Kama Jewelry said, "Gold demand in the domestic market saw a sharp decline in the first quarter of CY23 as record high prices of gold in the Indian market made consumers apprehensive about investing in gold and purchasing jewelry during the quarter. The 18k jewelry category continued to gain popularity due to the higher prices of 24k gold. On a standalone basis, the gold demand was robust but comparatively lower than last year's record demand." However, the jeweller maintained that demand for gold is likely to remain stable in the coming quarter as normal monsoon year will boost rural demand across India.
"The festive and the marriage season in H2CY23 will witness positive consumer sentiment. On the institutional front, central banks including the RBI and ETFs will likely pile on gold as signs of a recession in the US get more evident," said Colin Shah of Kama Jewelry.
Gold, silver price outlook
Speaking on outlook for gold rate today, Sugandha Sachdeva said, "Looking ahead, prices have stretched a bit and there is a minor resistance emerging around ₹61,500 per 10 gm and any breach of the same would mean an advance towards ₹62,500 per 10 gm mark in the coming days. Nonetheless, the price outlook remains positive in the short term as long as prices are holding above ₹59,500 per 10 gm mark or $1,975 per ounce on a closing basis."
"For silver, prices have an immediate hurdle at ₹78,000 per kg mark and any convincing move above the same would be construed as a bullish signal and lead to an extension of the up move, else it could drift lower to find support around the level of ₹74,400 per kg in coming days," Sugandha said.
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.
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