Gold and Silver Prices Drop Sharply: Is This the Right Time to Buy?
Investors are keeping a careful eye on the market due to the steep decline in the prices of gold and silver. Is it appropriate to purchase now, or will prices continue to decline?
In line with the weakening in international markets, gold and silver prices continued to decline on Tuesday. Precious metals were substantially impacted by optimism about a reduction in trade hostilities between the US and China as well as a stronger US currency.
MCX PRICES SLIP
Gold began at Rs 1,20,106 per 10 grams on the Multi Commodity Exchange (MCX) on Tuesday, down 0.7% from Rs 1,20,957 the day before. Silver opened at Rs 1,42,366 per kilogram, down 0.69%.
Gold was down 2.06% at Rs 1,18,461 per 10 grams at closing, while silver was down 1.36% at Rs 1,41,424 per kilogram.
PRESSURING GLOBAL FACTORS FOR BULLION
Following a robust two-month gain, traders are now taking profits amid shifting global cues, which has led to the decline. “After a strong two-month rally, gold and silver prices came under heavy selling pressure as both metals slipped below key psychological levels – $4,000 for gold and $47 per ounce for silver,” stated Rahul Kalantri, vice president of commodities at Mehta Equities Ltd. A higher dollar index and increased confidence regarding US trade talks with China and India are the main causes of the fall.
He continued by saying that the advancement of peace negotiations in Gaza also reduced demand for safe havens by easing geopolitical worries. “A weaker rupee is providing some support to bullion prices at lower levels,” he pointed out.
CENTRAL BANKS ARE THE NEW FOCUS
Investors are now looking to future central bank meetings for guidance. Following recent disappointing inflation statistics, the US Federal Reserve is anticipated to announce a 25-basis-point rate drop, while the Bank of Japan and the European Central Bank are likely to stick with their existing policies.
According to Kalantri, gold has resistance between $4,055 and $4,100 and support between $3,940 and $3,905.
AHEAD SHORT-TERM VOLATILITY
Aspect Bullion & Refinery CEO Darshan Desai stated that the outcome of the trade negotiations and policy announcements will determine the short-term direction.
He said, “Gold prices continue to decline as safe-haven demand weakens amid optimism over a potential US-China trade deal and a stronger US dollar.” “Those who are thinking about using gold as a hedge should be ready for short-term volatility and large price swings.”
He said that the Federal Reserve may “put further downward pressure on gold prices” if it suggests fewer rate cuts than anticipated.
IS IT TREND REVERSAL OR TEMPORARY WEAKNESS?
The present dip may be transitory, according to experts. Bullion may strengthen if central banks indicate further rate cuts or if global uncertainty reappear.
For the time being, traders are encouraged to exercise caution and see how the upcoming sessions develop.
Disclaimer: The experts’ and brokerages’ opinions, recommendations, and suggestions in this article are their own and do not represent the viewpoints of the Business Connect. Before making any actual trading or investing decisions, it is advised to speak with a knowledgeable broker or financial counselor.
