Gold and Silver Prices Experience a Significant Correction and Rebound
After reaching record highs earlier this week, gold and silver prices underwent a startling correction, only to see a rebound on October 23. As investors seized the opportunity to buy during the dip ahead of crucial economic data from the United States, the market dynamics shifted once again, albeit with a stronger dollar putting a damper on potential gains.
Gold and Silver Bounce Back on the MCX
In the early hours of Thursday, gold prices on the Multi Commodity Exchange (MCX) witnessed a notable uptick. Following a significant sell-off, gold December futures climbed by 0.89% to reach ₹1,22,938 per 10 grams around 9:08 AM IST. Meanwhile, silver December contracts gained 0.93%, settling at ₹1,46,915 per kg. By the evening session, the momentum pushed gold to ₹1,23,550 per 10 grams, while silver surged to ₹1,48,811 per kg, indicating a steady recovery from the previous day’s significant dips.
Profit Booking and Renewed Market Optimism
Jateen Trivedi, Vice President of Research at LKP Securities, pointed out that gold saw a remarkable recovery of ₹1,800, closing the day at ₹1,23,680 per 10 grams on the MCX. This bounce-back followed a steep sell-off, primarily due to extensive profit booking from overbought levels. The market also experienced renewed optimism regarding the US trade discussions with both India and China, marking one of the most significant corrections in recent months—a drop of nearly 5% on October 22.
Trivedi emphasized that evolving uncertainties surrounding US presidential policies contributed to this modest rebound. Investors recognized this moment as a chance to re-enter at lower price levels. He highlighted that the upcoming US Consumer Price Index (CPI) data would be crucial for determining gold’s immediate direction. Resistance levels for gold are seen between ₹1,25,000 and ₹1,25,500, while support hovers around ₹1,20,000 to ₹1,21,000.
Global Influences and Domestic Demand Trends
According to Rahul Kalantri, Vice President of Commodities at Mehta Equities Ltd, gold and silver prices stabilized around $4,050 and $48 per ounce after correcting sharply in previous sessions. The sell-off was largely attributed to profit booking at Monday’s record highs. Kalantri noted a shift in investor attitudes towards riskier assets, especially amid positive sentiment regarding US-India trade relations, which diminished the safe-haven appeal for gold.
Moreover, seasonal demand within India appears to be tapering off, applying additional pressure on physical market movements. Despite this short-term correction, Kalantri maintains that gold remains a robust investment for the year ahead, bolstered by expectations of further US interest rate cuts and persisting global economic uncertainties. Most market participants are now awaiting insights from Friday’s US CPI report to gauge the Federal Reserve’s forthcoming policy approaches.
Critical Levels to Monitor
In terms of dollar pricing, gold possesses support levels between $4,020 and $3,975, while resistance is positioned at $4,125 to $4,170. For silver, support is found at $47.85 to $47.40, with resistance levels at $48.75 to $49.30.
Looking at Indian market dynamics, gold has support between ₹1,21,070 and ₹1,20,580, with resistance noted at ₹1,22,350 to ₹1,23,000. Silver’s support lies in the range of ₹1,44,350 to ₹1,43,450, facing resistance approximately around ₹1,46,850 to ₹1,47,780.
Outlook on Gold’s Trajectory
Analysts predict that gold will likely trade within a narrow range in anticipation of Friday’s US CPI report, which is expected to shed light on inflation trends and future rate adjustments. If inflation levels show signs of easing, it may spur new buying interest in gold. Conversely, a stronger dollar or indications of monetary tightening could restrain upward movement in prices.
For the time being, traders are expected to remain cautious, keeping a watchful eye on global cues. Nevertheless, with the festive season gaining traction in India, gold may find itself supported in the short term.
(Disclaimer: The views and opinions expressed by experts/brokerages in this article do not reflect those of the India Today Group. It is recommended to consult with qualified financial advisors before making any investment or trading decisions.)
