Gold prices dip after 3-week high: Should you buy?
What's the story
Gold prices fell on Monday, November 25, after hitting a three-week high earlier in the day. The decline came as investors cashed in on profits and traders adjusted their expectations for Federal Reserve rate cuts. Spot gold fell 0.6% to $2,695.79 per ounce at 02:46 GMT while US gold futures fell 0.5% to settle at $2,697.90 per ounce.
Market status
Gold prices in India remain steady
In India, gold prices remained stable around ₹77,000 per 10gm. The price of 24-carat gold was listed at ₹79,630 per 10gm and 22-carat gold at ₹72,990 per 10gm. This stability in the Indian market is in contrast to the global trend of falling gold prices.
Market influences
Factors influencing gold price fluctuations
The recent fluctuations in gold prices have been driven by a number of factors. Matt Simpson, Senior Analyst at City Index, said that "some traders wanted to book profits around the $2,718 per ounce high." Meanwhile, changes in US interest rate expectations have also affected gold prices. The chances of a 25-basis-point Fed rate cut in December have fallen to 51%, from 62% last week.
Market volatility
Geopolitical tensions continue to impact gold prices
Despite recent profit-taking, persistent geopolitical tensions continue to impact gold prices. The Russia-Ukraine war, which is now in its third year, continues to be a major contributor to market volatility. Renisha Chainani, Head of Research at Augmont—Gold For All, said "The Russia-Ukraine war, which started on February 22, 2022, has completed more than 1,000 days and is still impacting the bullion market." "Rising tensions between Russia and Ukraine last week caused renewed unease, driving safe-haven flows into gold and silver."
Investment insights
Gold price levels and investment strategy
Chainani emphasized that the 50-day moving average (DMA) for gold is around $2,650 per ounce (₹75,500 per 10gm), and gold remains in an uptrend as long as prices remain above $2,550 per ounce (₹73,700 per 10gm). For Indian investors, Rahul Kalantri, VP of Commodities at Mehta Equities, said that gold is supported at ₹77,380-₹77,150 per 10gm with resistance levels at ₹77,850-₹78,040.
Strategy suggestion
Analysts suggest dip-buying as a viable strategy
Analysts recommend dip-buying as long as key support levels are maintained. "Gold is likely to trade in a range of ₹77,000-₹78,300 per 10gm on MCX. Elevated volatility is anticipated with global events influencing price trends," Jateen Trivedi, VP Research Analyst at LKP Securities, said.