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Gold Price Today Sees Huge Drop, Below Rs 46,400, Silver Dips to Rs 60,585; Time to Buy?

·4-min read

Gold price in India dropped significantly on Thursday after the US Federal Reserve had indicated easing its monthly bond purchases by next year. On the Multi-Commodity Exchange (MCX), October gold future slumped 0.62 per cent to Rs 46,383 at 0915 hours on September 23. The bullion has been trading in the red zone throughout the week. Silver price also witnessed a huge slump on Thursday, one of the highest in the recent months. The precious metal future tanked 0.97 per cent to Rs 60,585 on September 23.

In the international market, gold price fall on Thursday as US Fed had announced a sooner-than-expected interest rate hike. Spot gold was down 0.3 per cent at $1,762.33 per ounce, as of 0122 GMT, while US gold futures slipped 0.9 per cent to $1,762.10. Silver dipped 0.5 per cent to $22.55 per ounce.

The Federal Reserve said on Wednesday it will likely start reducing its monthly bond purchases as soon as November. The officials also signalled interest rate increases may follow sooner than it was expected earlier. US Dollar and the benchmark treasury yields rose after the Fed meeting and weighed on prices.

A drawdown of the central bank’s $120 billion in monthly bond purchases could begin after the November 2-3 policy meeting as long as US job growth through September is reasonably strong, Fed Chair Jerome Powell said in a news conference.

“International gold spot and futures extended losses on early Thursday morning in Asian trade after a slightly hawkish tilt from the US Federal Reserve in their meeting yesterday. Technically, LBMA gold could see a Bearish momentum up to $1756-$1748 levels. Resistance is at $1772-$1783 levels. LBMA Silver could see sideways to marginal downside momentum up to $22.05-$21.60 levels. Resistance is at $22.77-$23.30 levels,” said Sriram Iyer, senior research analyst at Reliance Securities.

“On the domestic side, gold and silver futures on MCX could start gap down on Thursday morning trade, tracking overseas prices. Technically, MCX Gold October could see sideways to marginal downside momentum up to Rs 46,150-45,900 levels. Resistance is at Rs 46,400-46,550 levels. MCX Silver December could test the support of Rs 60,000-59,300 levels. Resistance is at Rs 62,000-63,200 levels,” Iyer said.

“The statement from the Federal Reserve’s Open Market Committee (FOMC) was deemed mostly neutral on US monetary policy and actually rallied the gold market, initially. However, Fed Chairman Jerome Powell’s upbeat remarks on the US economy and jobs-growth prospects dented the gold bulls’ enthusiasm as the US dollar index rallied to its daily high while Powell was giving his press conference. October gold futures were last down $6.60 at $1,769.50. December Comex silver was last up $0.054 at $22.665 an ounce,” said Amit Khare, AVP- Research Commodities, Ganganagar Commodities Limited.

“The FOMC statement said the US economy continues to recover from the pandemic, but the rise in Covid cases has slowed the recovery. The statement said that a tapering of the central bank’s bond-buying program (quantitative easing) is on the table for discussion. The statement also said a US rate hike is likely in 2022. The Fed said the 2021 inflation forecast is 4.2 per cent and that inflation will remain above the Fed’s target rate of 2.0 per cent until 2024. The key outside markets yesterday see the US dollar index higher. Nymex crude oil futures prices are higher and trading around $72.00 a barrel. Meantime, the yield on the benchmark US 10-year Treasury note is presently fetching 1.309 per cent,” Khare added.

“Gold and silver are going to open gap down as per comex chart, This will be again a good opportunity for buyers. Because the technical chart of both metals are trading at oversold zone. Momentum indicator RSI also indicating the same and creating a strong positive divergence in four hourly as well as daily chart, So traders are advised to create fresh buy positions in gold and silver in gap down opening, traders should focus important technical levels given below for the day :

October gold closing price Rs 46,672, Support 1 – Rs 46,500, Support 2 – Rs 46,250, Resistance 1 – Rs 46,800, Resistance 2 – Rs 47,000. December Silver closing price Rs 61,180, Support 1 – Rs 60,700, Support 2 – Rs 60,000, Resistance 1 – Rs 61,630, Resistance 2 – Rs 62,260,” he mentioned.

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