Gold prices near ₹75,000 per 10 grams: Should Investors Make Their Move?

Gold prices have recently captured the attention of investors as they hover near ₹75,000 per 10 grams. On October 1, 2024, futures trading reflected a modest increase, with prices rising by ₹107 to ₹75,718 per 10 grams on the Multi Commodity Exchange (MCX). This uptick in price has been attributed to traders building fresh positions in anticipation of future market movements. However, it's crucial to recognize that gold has experienced a notable drop of over 2% from its all-time high of $2,707 per ounce, which translates to approximately ₹76,500 per 10 grams.

Analysts caution that while the immediate market sentiment may appear bearish, the long-term outlook for gold remains optimistic. Renisha Chainani, Head of Research at Augmont - Gold For All, highlighted that the recent retreat could continue, with potential price movements bringing gold down to about $2,600 per ounce, or ₹73,500 per 10 grams. This signals a critical moment for investors who might consider entering the market while prices are lower.

Investors should carefully assess the current trends and consider taking advantage of the short-term dip, as the broader market dynamics still favour bullish sentiment in the long run. "Despite the temporary downturn, bullish market participants continue to dominate the overall trend," Chainani stated. Therefore, this could be an opportune time for investors to reconsider their positions and capitalize on lower prices.

Globally, gold futures in New York saw a slight decline of 0.34%, trading at $2,643 per ounce. The geopolitical landscape remains tense, with ongoing conflicts not triggering a significant rally in gold prices as expected. Notably, Israel's recent military actions in Lebanon have not caused an uptick in bullion values, indicating a market that is currently influenced by various external factors.

Additionally, the monetary policy decisions of the U.S. Federal Reserve play a pivotal role in shaping gold prices. The market anticipates a potential 25 basis point rate cut, with expectations rising to 56.4%. Conversely, there remains a 43.6% chance that a more substantial cut of 50 basis points could occur. Such monetary policy shifts can substantially impact investor sentiment and the attractiveness of gold as a safe-haven asset.

Profit booking has also contributed to the short-term decline in gold prices, as many market participants opt to lock in profits after recent gains. Rahul Kalantri, Vice President of Commodities at Mehta Equities, noted that this trend, coupled with a rebound in the U.S. dollar index, has influenced the downward pressure on gold prices. In technical terms, gold currently faces key support levels between $2,618 and $2,601 per ounce, while resistance levels are noted at $2,651 to $2,669 per ounce. In rupee terms, support is positioned at ₹74,750 to ₹74,570 per 10 grams, with resistance levels ranging from ₹75,190 to ₹75,380 per 10 grams.

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As investors navigate these market fluctuations, it's essential to consider both short-term movements and long-term potential. The interplay between profit booking, geopolitical events, and U.S. monetary policy will continue to shape the gold market. Investors looking to build or adjust their portfolios might find this period presents a unique opportunity to acquire gold at more favourable prices while keeping an eye on the market’s long-term trajectory.

[Disclaimer: The information provided in this blog post is intended for informational purposes only and should not be construed as financial advice. Readers are encouraged to conduct their own research and consult with a financial advisor before making any investment decisions.]