Gold slips below Rs 1.42 lakh, silver tumbles further: Is a bigger dip coming?

Gold and silver prices have been sliding over the past few sessions, bringing some relief to festive and wedding-season buyers. But with prices still under pressure, could there be a bigger buying opportunity ahead?

In Short

• Gold and silver prices have fallen recently, offering relief to buyers
• Gold traded at Rs 1,41,979/10g, silver at Rs 1,85,900/kg on October 30
• Rising crude oil and US inflation fears pressure precious metals

Planning to buy gold or silver this festive and wedding season? The recent fall in prices may come as good news. After remaining at elevated levels, both precious metals have been losing ground over the past few sessions, offering some relief to buyers who were waiting for prices to cool.

On Friday, October 30, at 11.45 am, MCX gold was trading at Rs 1,41,979 per 10 grams, down 0.43%. Silver prices also witnessed a sharper decline, with MCX silver trading at Rs 1,85,900 per kg, down 1.88%.

However, the recent correction may not be over yet. Rising crude oil prices, renewed inflation concerns and expectations of another US Federal Reserve rate hike have weighed on gold and silver. So, should buyers make the most of the dip or wait for prices to fall further?

WHY ARE GOLD AND SILVER PRICES FALLING?

Gold and silver have remained under pressure as higher crude oil prices have raised concerns about inflation. Strong US inflation data has also strengthened expectations that the Federal Reserve could raise interest rates again in December.

Consumer prices in the US picked up in September, partly due to higher gasoline and other goods prices. This has added to expectations that the central bank may need to keep interest rates higher to control inflation.

Higher interest rates generally make gold less attractive because the metal does not offer any regular interest income. As a result, investors may move towards interest-bearing assets, putting pressure on gold prices.

Geopolitical developments have added to the uncertainty. Crude oil prices have risen amid fears that the US could resume military strikes on Iran, increasing the risk of disruptions to energy supplies. Higher oil prices can push inflation up further and complicate the outlook for interest rates, affecting precious metals.

According to Dr Renisha Chainani, Chief Research Officer at Augmont, the Federal Reserve has kept the possibility of another rate hike open as it continues to tackle stubborn inflation.

She said, "The Fed has left the door open to a hike before year-end as it tries to tame stubborn inflation. Thursday's data backed that view: the US personal consumption expenditures price index rose 0.5% last month, its biggest jump since March. According to CME's FedWatch Tool, traders now see about a 75% chance of a December hike."

WHERE ARE GOLD AND SILVER PRICES HEADED?

The near-term outlook for both precious metals remains weak, with experts warning that prices could decline further before finding support.

Chainani said gold has slipped below the important $4,000 (around Rs 1,42,000) support level. This could lead to another fall towards $3,950 (around Rs 1,40,000) and $3,900 (around Rs 1,38,000) over the next 10-15 days.

Silver has also broken below its $52.5 (around Rs 1,92,000) support level and could move towards $50 (around Rs 1,80,000).

However, she believes the medium-term outlook could be more positive.

"Both metals are trying to build a base, gold around $3,900–3,950 and silver around $50–52. We see these as strong support and accumulation zones. We expect prices to hold here and then rebound 10–15% over the coming weeks," she said.

For the broader uptrend to resume, gold needs to sustain above $4,100, while silver needs to move above $58, Chainani added.

WHAT DO TECHNICAL INDICATORS SUGGEST?

Ponmudi R, CEO of Enrich Money, also pointed to continued weakness in gold prices.

He said MCX gold opened near Rs 1,42,225 and was trading around Rs 1,41,840, down 0.53%. The metal has slipped below the Rs 1,43,000–1,43,700 range, which is now acting as an immediate resistance level.

The next resistance is placed between Rs 1,45,300 and Rs 1,46,000.

On the downside, immediate support for gold lies in the Rs 1,40,000–1,41,000 range. If selling pressure continues, prices could find the next support between Rs 1,37,500 and Rs 1,38,300.

SHOULD INVESTORS BUY GOLD AND SILVER NOW OR WAIT?

The recent fall may tempt investors to buy gold and silver at lower levels. However, with prices still under pressure and the possibility of further declines, rushing into the market may not be the best strategy.

For short-term investors, waiting for prices to stabilise around the support levels could be a better approach. Gold may test Rs 1,40,000 and could move towards Rs 1,38,000, while silver may decline towards Rs 1,80,000.

Those looking to invest over the medium to long term can consider staggered buying instead of investing the entire amount at one go. This allows them to spread their purchases across different price levels and benefit if prices correct further.

For festive and wedding buyers, the decision may be different. Those who need to purchase jewellery or coins for an upcoming occasion may consider buying in parts rather than waiting indefinitely for prices to fall. After all, it is difficult to predict the exact bottom of the market.

The key is to keep an eye on US inflation data, crude oil prices and the Federal Reserve's interest-rate decision, as these factors could influence the next move in gold and silver.

- Ends