Gold price rebounds from 2-month low. Should you buy or wait for next sell off?

According to commodity market experts, correction in US dollar rates and Dollar Index retracing from the resistance levels was the major reason for bounce back in gold prices across world in the week gone by. They said that gold rates today has immediate support placed at $1,835 levels whereas major support for the the precious bullion metal is at $1,810 levels. On MCX, immediate support for the yellow metal price is placed at ₹55,300 per 10 gm while ₹55,000 per 10 gm is expected to remain major base for the precious metal price. On higher side, gold price is facing resistance at 56,200 levels whereas ₹56,700 per 10 gm is major hurdle for the precious bullion price movement. In international spot market $1,860 is immediate hurdle while $1,890 per ounce is major resistance for the yellow metal.

Bullion experts advised gold and silver investors to maintain ‘buy on dips’ strategy as profit booking is US dollar may continue next week leading to more upside in gold and silver price.

Speaking on reason for rise in gold prices last week, Anuj Gupta, Vice President — Research at IIFL Securities said, “After oscillating at 2-month low for few sessions, gold witnessed some bottom fishing that led to rise in prices across globe. Profit booking in US dollar at higher levels was one of the major reasons for rise in gold price in domestic and international market. Last week, Dollar Index surged above 105 levels but failed to sustain above 105 levels that helped gold prices to rally from its over sold zone.”

On reasons that triggered profit booking in the US dollar, Nirpendra Yadav, Senior Commodity Research Analyst at Swastika Investmart said, “There has been a decline in consumer confidence figures amidst improvement in data released from the US, which has supported gold prices. After the end of the zero COVID-19 policy, activity in China’s economy has increased, the effect of which has been seen in the form of better manufacturing figures released last week. The US unemployment figures have also been recorded better than expected, keeping the expectation of a hawkish monetary policy.”

Swastika Investmart expert went on to add that the Indian Meteorological Department’s recently released forecast on the monsoon has expressed the possibility of the impact of El Nino, where the likelihood of drought increases. He said that it may force the Reserve Bank of India (RBI) to remain soft on interest rate hike in upcoming monetary policy meeting. Nirpender Yadav expected that volatility in gold prices may continue further and advised investors to know their levels while making any buying or selling decision on gold and other bullions.

Sharing major pivot levels for gold, Anuj Gupta of IIFL Securities said, “In international market, small range of gold is placed between $1,835 to $1,860 per ounce levels whereas broader range of the precious metal is lying in between $1,810 to $1,890 levels. On MCX, small range of gold is placed between ₹55,300 to ₹56,200 per 10 gm while broad range of gold is expected in ₹55,000 to ₹56,700 per 10 gm in near term.”

Unveiling near term investment strategy for gold investors, Anuj Gupta said, “US dollar is expected to remain sideways to bearish in near term, which may support gold price. So, one should buy at support levels and book profit at resistance levels as overall trend for gold price may remain sideways to positive till final outcome of the US Fed’s FOMC meeting (scheduled on 21-22 March 2023) becomes public.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.