Experts say now is a good time to buy gold because gold prices have fallen
In the gold market on Friday, Multi Commodity Exchange (MCX) gained 198 points and closed at 48,083 per 10 gram. Although this rise was enough to pare the yellow metal’s biggest loss in six years, it ended 2021 having lost more than 4 percent. The MCX gold rate today is nearly 8,000 below its all-time high of nearly 56,200 per 10 grams.
The current gold price, according to commodity market experts, is around ₹8,000 lower than its all-time high and when it dipped below $1800 levels, gold has been able to attract buyers. Gold has bounced back sharply after profit booking in the $1820 to $1835 range, even during choppy trade last fortnight. In their view, the gold price outlook is currently determined by the spot market, which indicates a ‘sideways trend with a positive bias.’ They advised gold investors to maintain ‘buy on dips’ as gold may reach the $1880 to $1900 per ounce level within the next 3 months. Gold experts said the yellow metal has taken strong support at $1760 per ounce levels and has remained there for near one month. As such, one should keep an eye on the broad range of $1760 to $1835 per ounce and follow the buy-on-dips strategy.
They said that MCX gold price today is priced above ₹ 48,000 per 10 gm and it has strong support at ₹ 47,500 levels. They said that ₹ 47,800 to ₹ 47,900 is a good buying range for short-term investors as the yellow metal may soon go up to 49,300 to 49,500 per 10 gm once there is ease Indian National Rupee (INR) against the US dollar (USD). They said that in the last fortnight, INR has appreciated by around ₹ 2 against the US dollar, which didn’t allow the MCX gold rate to hit ₹49,000 but short-term gold investors should take advantage of the current level of gold because the demand for dollar is expected to pick up in New Year 2022.
Speaking on gold price outlook; Vice President — Commodity Research at Motilal Oswal said, “Gold price today in the spot market is trading in $1760 to $1835 per ounce range and on the breakage of the above hurdle, it may soon go up to $1880 to $1900 per ounce levels. Overall, the gold price outlook for the short-term is sideways with positive bias as the yellow metal has managed to attract huge demand every time it came below $1800 levels in the spot market. As current gold price trade pattern indicates sideways trend with a positive bias, my suggestion to short-term gold investors is to maintain buy on dips strategy.”
Despite positive signals from the spot market on gold price appreciation in the MCX, Anuj Gupta, Vice President — Commodity & Currency Trade at IIFL Securities said, “The main reason for choppy gold prices in domestic markets is the increase in Indian rupee versus the US dollar. In the last fortnight, the Indian rupee has appreciated around ₹2 against the US dollar. Gold price rises on the spot market were nullified by this appreciation of the rupee.”
Anuj Gupta said that ₹1 rise against the USD led to around ₹300 to ₹350 dips in the MCX gold rate. As the Indian rupee has appreciated to the tune of ₹2 against the USD in the Forex Market, around ₹600 to ₹700 rises in MCX gold rate got contained. However, Anuj Gupta of IIFL predicts a sharp rise in USD in New Year 2022, as demand for the dollar will increase after the holidays.
“Forex traders are customarily expected to square off their positions in US dollars and take new positions in January following new year celebrations. In the second fortnight of every year, the dollar dips against the major global currencies. However, from the second to the third week of January, the US currency starts to regain its lost ground. Therefore, from the second to the third week of January, the rupee will calm down against the US dollar, which is likely to support a rally in gold prices. So, one should buy gold at around ₹47,800 per 10 gm levels maintaining stop loss at ₹47,500 levels. In the next, month, the yellow metal may go up to ₹49,300 levels. However, if the gold price rally continues in the spot market, it may go up to ₹51,000 to ₹51,500 per 10 gm levels by end of March 2022,” concluded Anuj Gupta of IIFL Securities.