Gold price dips in September. Should you buy ahead of the festive season?



Gold price on yesterday dipped 0.05 per cent on Multi Commodity Exchange (MCX). The December 2021 gold future contract on MCX closed at 46,500 per 10 gm, 21 below its Thursday close price. Yellow metal price in the month of September corrected around 4 per cent while in the month of August it fell around 2.1 per cent on MCX. According to the commodity experts, yellow metal price will continue to remain under pressure till it is trading below $1750 per ounce in the international market. However, they maintained that precious bullion metal has strong support at $1680 and any big dip in gold price should be seen as buying opportunity for yellow metal investors.

Triggers for gold price

As per gold commodity experts, gold price may continue to remain under pressure on strong US Dollar. But, rising crude oil prices may lead to sharp rise in global inflation. This rise in inflation may force Fed to rethink over its recent decision in regard to bond tapering. So, rising crude oil price may lead to trend reversal in gold price in second fortnight of October 2021. Apart from this, fast approaching festival season in India is expected to fuel gold demand in the domestic market, which is also positive for the yellow metal outlook. They said that current power crisis in China may also lead to sharp correction in equity markets where equity investors may switch to gold investments.

Speaking on gold price outlook; Anuj Gupta, Vice President — Commodity & Currency Trade at IIFL Securities said, “Gold price is under pressure till it is below $1750 per ounce in international markets. But, it has strong support at $1680 per ounce levels and any dip in precious metal price should be seen as buying opportunity by investors. Current, dip in gold price is because of the US Dollar gaining strength after the Fed announcement in regard to bond tapering. However, the way crude oil price has been soaring in international market; it may lead to rise in global inflation in next few weeks that may force Fed to rethink over its announcement. Fast approaching festival season in India is also creating conducing milieu for gold investors.”

Echoing with Anuj Gupta’s views; Amit Khare, AVP- Research Commodities at Ganganagar Commodity Limited said, “Power crisis in China has put global equity markets under pressure. If this crisis further continues, then equity investors may switch towards gold investments as soaring crude oil prices in the international market will have negative impact on the global economy, especially on the inflation front.”

Gold price target

On whether there will be any trend reversal in gold price in October, Anuj Gupta of IIFL Securities said, “In first fortnight of October, gold price on MCX may further go down up to 45,500 to 45,000 per 10 gm as US Dollar may continue to remain strong in this period. However, once, it starts showing some weakness, gold price in international market will break $1750 to $1760 per ounce hurdle and hit $1800 to $1850 per ounce range in next one month. In terms of MCX, go0ld price may go up to 48,000 to 48,500 per 10 gm in next one month.”

Standing in sync with Anuj Gupta, Amit Khare of Ganganagar Commodity Limited said, ” 45,000 to 46,000 per 10 gm on MCX is a very good buying range for gold investors as it is around 10,000 lower from its all-time high. One can expect 4,000 to 5,000 per 10 gm rise from these levels in gold price in next 3 months. Similarly, silver investors may expect 10,000 per kg rise in next 3 month from current silver price on MCX.”

Abhishek Chauhan, Head — Commodity & Currency at Swastika Investmart Ltd said, “We are expecting Gold price to hit 49,000 per 10 gm till upcoming Diwali, which is around a month away.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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