In a dramatic reversal of fortunes, gold prices rebounded with a 1.23% surge today, as geopolitical tensions and a weakening dollar breathed new life into the precious metal. The precious yellow metal opened on the Multi Commodity Exchange (MCX) at Rs 57,689 per 10 grams, hitting an intraday low of Rs 57,681 before staging a remarkable recovery.
In the international market, gold prices hovered around $1,861.05 per troy ounce, marking a significant jump from recent lows. The silver market also experienced fluctuations, with silver opening at Rs 69,045 per kg, briefly dropping to an intraday low of Rs 68,745 on the MCX, and settling at around $21.73 per troy ounce in the global market.
Praveen Singh, Associate VP, Fundamental Currencies and Commodities at Sharekhan by BNP Paribas, attributed this resurgence to several factors. He explained, “Spot gold closed with a jump of nearly 1.50% at $1,861 on safe-haven demand, driven by the ongoing Hamas-Israel conflict. Furthermore, dovish comments from the US Federal Reserve also provided support to the metal.”
Singh continued, “Gold is recovering after a heavy sell-off. Thus, the metal may recover further in the wake of the Middle East conflict and upcoming US CPI inflation data. The US dollar index and bond yields may further soften into the run-up to the US CPI inflation data, which will keep the commodities bid.”
The first week of October had been challenging for bullion, marked by a steep decline in prices due to the US Federal Reserve’s aggressive stance on a higher-for-longer monetary policy. This had propelled the dollar index to reach 107 levels, with US Treasury Bond yields hitting a 16-year high at over 5%.
However, Prithviraj Kothari, MD CEO of RiddiSiddhi Bullions (RSBL), highlighted a crucial turning point. “Gold prices rebounded from the low of Rs 56,000 last week as prices were trading in an oversold zone and geopolitical tensions sparked a new wave of global risk aversion, assisting the safe-haven gold price to rise.”
Looking ahead, Kothari expressed optimism, stating, “From current levels of Rs 57,500, this momentum is likely to continue at least towards the next resistance of Rs 58,000 and 58,500 in the short term. While silver can be bought near Rs 68,000 for the target of Rs 70,000 and Rs 72,000 in the short term.”
Anuj Gupta, Head of Commodity and Currency at HDFC Securities, emphasized the role of global events in the precious metals’ resurgence. He said, “Gold prices increased sharply by 1.23% and closed at a 5-day high at 57,572 levels on the back of the war between Israel and Hamas. The dollar index also corrected from the overbought zone, which signaled support for the gold price. The dollar index is trading below 106 levels. Now, the demand of fund houses and central banks is shifting from the dollar to gold.”
Amit Khare, Associate Vice President at GCL Broking, encouraged traders to seize the opportunity, stating, “As per the daily chart, bullions are hitting bottom. We can see a good short covering rally. Momentum indicator RSI also shows this. Traders are advised to make fresh buy positions in Gold and Silver near the given support level one with the stop loss of support level two and book near the given resistance levels.”
In these uncertain times, the precious metals market continues to be influenced by global events and monetary policies, making it a focal point for investors seeking a safe haven. Gold and silver enthusiasts are keeping a keen eye on developments both at home and abroad as they navigate these dynamic market conditions.