Gold down nearly Rs 2000 per 10gm from all-time high? Is it a ‘buy’ at current levels?

Amid rising geo-political tension and world-over uncertainty, the precious yellow-metal which scaled new highs over the previous weekend has sharply descended in price. After hitting its all-time high of Rs 73,958 per 10 gm, the precious commodity at today’s low traded at Rs 72,027, down Rs 1930 per 10gm.

Last at around 10:21 am, Gold June futures traded with a cut of 0.83 per cent or Rs 606 at Rs 72,200, after falling over 1 per cent in early trade. Meanwhile silver May futures is down over 1.54 per cent or Rs 1286 at Rs 82,221 per kg.

Gold’s phenomenal rally has been brought to a halt amid receding geo-poltical tensions. Iran as per a Reuters report on Friday said  that it had no plan to retaliate following an apparent Israeli drone attack within its borders, which in turn followed an unprecedented Iranian missile and drone attack on Israel days before.

Gold internationally slid 0.6per cent to $2,376.40 per ounce, retreating from near the all-time peak of $2,431.29 from last week.

The dollar index, which measures the currency against six major peers, eased 0.07 per cent to 106.03. It was also at a five-month top last week, at 106.51, added Reuters.

Should you buy gold after a steep decline now?

Policymakers are now pricing in the earliest rate cut in September. “We think policymakers will not feel comfortable starting the cutting cycle in June or even September,” BofA economist Stephen Juneau is quoted as saying in a report. So, this is primarily what is restraining the fresh leg of the rally in the bullion.  Besides higher US bond yield is another factor playing out prominently here.

"Gold showed very high price volatility in the international markets amid heightened uncertainty in the middle-east and dollar index. Gold prices fell slightly on Monday morning as rising US Treasury rates impacted on dollar-priced metal. Gold prices remained under pressure after hawkish remarks from Federal Reserve officials. The possibility that the US Federal Reserve will leave interest rates steady this year is increasing," noted Rahul Kalantri, VP-Commodities, Mehta Equities.

Our outlook for gold and silver remains optimistic this fiscal year. However, for traders and short-term investors, it's advisable to trim bullish positions due to overbought signals on the daily chart. In the near term, barring any geopolitical upheavals, we anticipate a slight downtrend, with gold potentially reaching around $2310 and silver around $2250. We recommend considering new buying opportunities only if gold closes above $2420 or if the domestic prices surpasses Rs 73500, he added.

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