Gold and silver prices likely to fall further

Gold opened on the Multi Commodity Exchange (MCX) on Tuesday at Rs 57,426 per 10 grams and hit an intraday low of Rs 56,565. In the international market, prices hovered around $1,817.38 per troy ounce. Meanwhile, silver opened at Rs 69,255 per kg, hit an intraday low of Rs 65,666 on the MCX, and hovered around $20.77 per troy ounce in the international market.

Gold and silver prices slipped on Monday on the Comex as the domestic market was shut.

Manav Modi, Analyst of commodity and currency Motilal Oswal Financial Services, says, "The dollar index has risen from a low of 99.60 to more than 107, i.e. 7.5% in around two months, in a similar time frame US 10-year yields also moved from 3.7% to 4.7%.”

In the past few weeks, US Fed officials' comments have also taken a significant turn as after a hawkish pause, expectations for further rate hikes by the Fed have increased, moving away from the narrative of a pause in monetary policy tightening.

Fed officials say monetary policy will need to stay restrictive for “some time” to bring inflation back down to its 2% target, but their unity around that phrase masks an ongoing debate over another possible rate hike this year.

Modi says, “US manufacturing took a step further towards recovery in September as production picked up and employment rebounded. On one end, UAW strikes have stirred some volatility in the market, but US lawmakers passed short-term deals to avoid a government shutdown and [that] supported an up-move in the Dollar index. Focus now shifts to US job opening and India manufacturing data.”

Anuj Gupta, Head of Commodity and Currency at HDFC Securities, believes gold prices will likely extend their fall after the price broke support at $1880. Comex Spot Gold has immediate strong support at $1850 and resistance at $1893. MCX Gold December future has resistance at 58600 and supports at 57980/57700 for the day.

“We anticipate the gold price likely to recover from the support level of $1850 next week, and the price can bounce back towards the 1893–1910 level next week. MCX Gold December has strong support at 57700/57350 and resistance at 58250/58600. The price is expected to trade in this range next week. Buy Gold December contract at 57700 TGT 586000 SL 57350.  Bullish momentum in silver is likely to continue next week. Buy Silver Dec future at 71500-71600 for Target 73400/74000 Keep Stop Loss 70700,” added Gupta.

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