Gold price outlook: Gold prices have experienced substantial decline, dropping approximately 7% from their highest point of Rs 99,358/10 grams recorded on April 22 on the MCX. The precious metal is currently at risk of ending below the 50-day moving average, something not seen since December. But where are gold prices headed and what should investors do if the gold rate dips to Rs 88,000 per 10 grams?
According to Axis Securities, gold is currently testing the lower range of a 50-day moving average envelope (+3%), which has provided support during all decreases since November 2024.
The firm has identified May 16 to May 20 as a vital period for possible trend changes. Their analysis indicated $3,136 as an essential support level in international markets, suggesting that if prices fall below this point, they could potentially decline towards the $2,875-$2,950 range, according to an ET report.
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After gold prices hitting Rs 1 lakh, is it time for silver to rally?Axis Securities has observed that gold prices are exhibiting pressure amid significant macro changes, raising concerns about potential further decline if prices fall below a crucial support level.
The firm has noted that reduced expectations for US Federal Reserve rate cuts have affected the demand for secure investments like gold. Additionally, diminished concerns about trade-war impacts on growth have led to increased bond yields, reducing gold's attractiveness.
The firm pointed out that gold's lack of yield, combined with increasing interest rates, is diminishing its appeal as an investment option.
Will Gold Prices Dip To Rs 88,000?
Augmont's Head of Research Renisha Chainani believes that gold prices are experiencing significant pressure due to ongoing geopolitical issues and reduced market demand.
According to her analysis, "Gold prices bounced up about $100 (Rs 1,500) from their intraday lows as investors appeared to be shifting back to safe-haven assets due to a slowdown in the pace of discussions between Russia and Ukraine and less-than-expected US data".
She identified potential opportunities for investors during this period of market pressure.
She further stated, "As gold prices have broken the Double-top neckline support of $3200, more downside is expected up to $3000-50 (Rs 87,000 - 88,000) in the short term," suggesting that whilst current trends appear negative, there could be opportunities for long-term investors at reduced price points.
The analysis from Augmont indicates substantial downside risk in the technical assessment of gold. Their report establishes support at Rs 92,000/10 gm and resistance at Rs 94,000/10 gm for Indian gold. Despite this confined trading range, the overall market sentiment suggests possible further price reductions.
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India has the world's 7th highest gold reserves! Why is RBI buying gold and how does it help the Indian economy?Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions, expresses a moderately positive outlook, noting that gold's fundamental strengths remain stable despite present market adjustments.
"While gold's long-term fundamentals are fundamentally intact, a short-term view of its price trajectory remains vulnerable to macroeconomic sea-changes. Investors still need to be especially attentive to what plays out globally with a diversified strategy in the event of a price downside tail," he said.
Kothari cautioned about the possibility of significant price adjustments should worldwide economic recovery exceed current projections.
"Nonetheless, a steep correction could also be on the horizon. If global economies start to see speedier recoveries, signaling the end of the necessity of risk-off trades, gold could slip downward to the $3000-$3050 range," he added.
(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)
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