Gold investors are advised to maintain 'buy on dips' strategy till gold is trading above $1,720 per ounce in international market, say commodity experts
On account of mixed signals from the US Federal Reserve on interest rates, gold price is currently at its 2-month low. However, commodity experts are of the opinion that it’s a good opportunity for gold investors as rising fear of the Delta variant of Covid-19 across Asia and Europe may underpin safe haven demand for the precious metal after the recent correction. They advised investors to maintain 'buy on dips' strategy till gold is trading above $1,720 per ounce in international market. They said that yellow metal price at Multi Commodity Exchange (MCX) has strong immediate support at ₹46,500 and ₹45,100 per 10 gm. Expecting trend reversal in precious bullion metal in second fortnight of this month, experts predicted ₹52,000 per 10 gm at MCX at the end of 2021.
Revealing the reason for gold price crash Sugandha Sachdeva, Vice President — Commodity & Currency Research at Religare Broking Limited said, "Gold prices have witnessed a decline towards two-month low as investors have grown weary after mixed signals from the Fed on policy normalisation and are awaiting further cues to assess the Fed's stance going forward. Besides, the dollar index has staged a decent recovery after the Fed's hawkish tilt earlier this month which is weighing on gold prices."
Gold price: Trend reversal strongly expected
However, Sugandha Sachdeva of Religare Broking expects a strong recovery in the gold price, saying, "Market participants are keeping an eye on the recent surge in Delta variant of the COVID-19 virus across Asia and Europe that may underpin safe haven demand for the precious metal after the recent correction. The dollar’s prevailing strength is also likely to witness a pause amid progress over the US President Biden’s ambitious $1.2 trillion infrastructure package that should support recovery in the precious metal."
Investment strategy for investors
Advising gold investors to maintain buy on dips strategy in current scenario Anuj Gupta, Vice President — Commodity & Currency Trade at IIFL Securities said, "This sharp fall in yellow metal price is big opportunity for gold investors. They should continue buy on dips till gold price in international market is above $1,720 per ounce mark. We may witness trend reversal in precious yellow metal price from $1,750 per ounce mark too, as it is working as current immediate support for gold."
Sharing major levels to keep in mind from domestic market's perspective Anuj Gupta of IIFL Securities said, "In current market scenario, gold price at MCX has immediate strong support at ₹46,500 per 10 gm while it has strong support is ₹45,800 per 10 gm levels." He said that recent rise in yellow metal rates should not be taken as the precious metal making its lower bottom as this rise is due to the Indian National Rupee (INR) depreciating against the US dollar (USED).
Gold price outlook
Sugandha Sachdeva of Religare Broking said, "The price set up for gold indicates that the metal is consolidating near the key support zone of ₹46,500 to 46,300 per 10 gms after the considerable fall and expected to witness a rebound in the near-term. A rise looks plausible towards ₹47,500 per 10 gm mark initially, that can extend further towards ₹48100 per 10 gm mark for the month ahead. On the contrary, a sustained close below the mentioned support could trigger selling pressure, leading the metal lower towards ₹45,500 to ₹45,300 per 10 gms zone."
Asked about the gold price target in medium to long-term time-horizon Anuj Gupta of IIFL Securities said, "Gold price may go up to ₹50,500 in next 3-months while by the end of this year, we may see the yellow metal quoting at ₹52,000 per 10 gm at MCX."
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