Gold now down nearly Rs 6200/10 gm from all-time highs hit in October end: Should you wait or bet on opportunity?
Gold prices are now badly hit after Donald Trump has taken over as the US President and there is high anxiousness with respect to the likely Federal Bank's stance on monetary policy going ahead. Yesterday's US CPI print though came in on expected lines painted a uncertain picture with inflation remaining sticky during October.
While the reading still spurred bets on a December interest rate cut by the Federal Reserve, the longer-term rate outlook grew highly unclear, amid potentially inflationary policies under Trump.
Gold price hit high on October 30
After hitting a new high of Rs 79,775 for the December contract, gold prices are seeing time correction with fundamentals still holding bright for the metal in the long run.
Gold seeing selling pressure- A Trump effect
Dr. Renisha Chainani, Head Research - Augmont - Gold For All said, "As the Trump trade continues, there is still a lot of selling pressure on the price of gold. In anticipation that US President-elect Donald Trump's policies will promote the economy, the US dollar extends its post-election rise and reaches a new year-to-date high."
Investors, however, think the next Trump administration's anticipated protectionist tariffs may increase inflation and compel the Fed to halt its easing cycle, she added.
Macro data and higher US yields also at play
In light of a weakening labor market, the data confirmed market wagers that the US Federal Reserve would announce a third interest rate cut in December. Furthermore, US data released yesterday suggested that efforts to reduce inflation were moving more slowly, which may lead to fewer rate reduction in the next year. This helps to push money away from gold and maintains support for high US Treasury bond yields.
Near term outlook looks weak
Renisha said as suggested, Gold has achieved the target of $2565 (~Rs 73800) and Silver has achieved. the target of $30 (~Rs 88000).Prices could continue to weaken more up to $2500-20 (~Rs 72800-73000) in Gold and $29.70 (~Rs 87000) in Silver in the next 2-3 days.
The suggested target implies still further cut of 1 per cent from today's low levels of Rs 73,600 per 10 gm
Support and resistance level for gold and silver
Manoj Jain- Director - India Nivesh said, "We expect gold and silver prices to remain to remain weak amid strength in the dollar index, U.S. bond yields and crypto rally and could test $2,550 and $30.00 per troy ounce levels respectively in the short term. Gold has support at $2572-2554, while resistance at $2600-2622 per troy ounce and silver has support at $30.34-30.00, while resistance is at $31.00-31.34 per troy ounce in today’s session."
Avoid recommended for now in gold and silver
At MCX mcx, gold is having support at 74180-73850 and resistance at 74720-75000 while silver is having support at 88500-87750 and resistance at 90000-90650. We suggest staying away from the gold and silver in today's session and wait for some stability in the markets, adds Jain.