Experts Predict Further Correction in Gold and Silver Prices

Investors favour dollar over metals with dollar index at its peak and potential shifts in US policies, expert Anuj Gupta tells ETV Bharat's Saurabh Shukla.

Delhi: Experts predict a potential decline in gold and silver prices in the coming days. They suggest that news of a possible ceasefire between Israel and Hezbollah could lead to a reduction in these prices. Additionally, it will be important to keep an eye on developments after the new U.S. government takes office.

In the Indian markets, gold has fallen by about 6.5% from its peak, while silver has dropped by 13%. Experts believe that by December, the outlook for gold and silver prices will become clearer.

ETV Bharat spoke with Anuj Gupta, Head of Currency and Commodities at HDFC Securities, regarding the prices of gold and silver. He said that from its high of 79,535 at MCX, Gold is currently trading at 75,041 rupees per 10 grams (as of 26 Nov 2024, 14:23 IST). Anuj Gupta stated that global issues, along with news indicating a potential ceasefire between Israel and Hezbollah, are likely to drive prices lower. He also mentioned that with the dollar index at its peak and potential shifts in US policies, investors are favouring the dollar over metals.

According to Gupta, in the short term, gold could reach the 74,600 level, and if this level is broken, it may fall further to 73,900. As for silver, he noted that it is currently trading at 87,774 rupees per kg on MCX (as of 26 Nov 2024, 14:23 IST). In the near term, silver may drop to 86,700, and after that, it could decline to 82,900.

Post-December, once the new US government settles in, price trends may change, as more clarity is needed on how the new administration will shape its policies.

The India Bullion and Jewellers Association (IBJA) told ETV Bharat that the rollercoaster ride in gold prices is likely to continue for a couple of more weeks as the market attempts to find a direction after Trump's election victory.

According to Surendra Mehta, National Secretary of IBJA, the U.S. Debt-to-GDP ratio is over 125% and will continue to rise. Every American citizen is burdened with approximately $108,000 in debt. The revenue-to-expense ratio in the US is mismatched, and the overall national debt of $36 trillion is expected to grow further. This presents a serious financial situation for the US and could potentially lead to a recession.

Mehta stated that this could certainly make gold bullish in the long run. However, in the short term, gold is likely to test $2,524 in the spot market. He also mentioned that tariffs and sanctions on Chinese products could impact their manufacturing activities, which might lead China to start buying more gold again.

Experts say that fluctuations in gold and silver prices are influenced by a variety of factors, including global demand, changes in currency values across countries, current interest rates, and government regulations on gold trading. In addition, global events—such as economic conditions and the strength of the US dollar against other currencies—play a major role in shaping gold prices in India.

For example, the rising tensions between Russia and Ukraine had increased both global and local demand for gold. However, prices took a downturn after the US elections, as investors shifted away from the safe-haven asset in search of better returns in the equity market. Following the elections, gold prices fell, and domestic markets saw a significant dip in prices after the festive season.

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