The fall in gold prices has put investors in worry. Will the rates fall to Rs 88,000 or is there a signal of a new investment opportunity? Know the latest analysis!
Fall in Gold Prices: Is there a new opportunity for investors?
Today, a tremendous fall is being seen in the prices of gold. On April 22, gold had reached an all-time high of Rs 99,358/10 grams on MCX, but till now there has been a fall of about 7%. With this fall, gold is going to fall below its 50-day moving average, which is happening for the first time after December. Amidst this market shift, there is only one question in the minds of investors – Can gold fall to Rs 88,000/10 grams?
What impact is being had on Gold Prices?
Market experts say that one of the major reasons for the fall in gold price is the lowering of expectations of interest rate cut by the US Federal Reserve. With the lowering of expectations of rate cuts, the demand for secure investments like gold is also getting affected. Also, now there is not as much concern about the impact of trade war as before, due to which bond yields are rising and the attractiveness of gold is decreasing.
According to Axis Securities, May 16 to May 20 is a crucial period in which a trend shift could be seen. They say that if international gold prices break the support of $3,136, then gold could fall to the $2,875 – $2,950 range.
Can Gold Fall to Rs 88,000?
Augmont’s Head of Research Reisha Chenani says that gold is currently under pressure due to geopolitical tensions and low market demand. Their analysis says that gold prices have broken the double-top neckline support of $3200, which means further fall is expected. In the short-term, the price can reach $3000-$3050 range, which will be around Rs 87,000 – 88,000 in the Indian market.
Augmont has identified a support level of Rs 92,000/10 gm and a resistance level of Rs 94,000 for gold. This means that the price is likely to trade within this range, but the sentiment is overall bearish.
Opportunity or difficulty for investors?
Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions, says that gold fundamentals are strong in the long-term, but in the short-term macroeconomic shifts are making gold volatile. They say that if the global economic recovery speeds up, gold could go further down.
If the worldwide economy starts recovering quickly, the demand for risk-off trades will reduce and gold could go further down to $3000-$3050 range. This means that if investors look from a long-term perspective, there could be a good buying opportunity for them at lower levels.
What should investors do?
If you are thinking of investing in gold, then it is important to understand that the market is currently in a sensitive phase. Short-term volatility can be high, but diversification can be a good option in the long-term.
- Short-term traders: If you are doing short-term trading, keep a stop-loss strategy in mind and closely monitor the support level of Rs 92,000.
- Long-term investors: If you are a long-term investor, you can consider buying when the price comes near Rs 87,000 – 88,000 as fundamentals are still strong.
- Diversified investment approach: Gold is a safe-haven asset, so if you adopt a diversified investment strategy, it can provide stability to the overall portfolio.
Conclusion
The fall in gold prices is definitely a matter of tension for investors, but it is also pointing towards a new opportunity. If the price falls to Rs 88,000, it can be a good buying opportunity for the long-term. But it is also important to keep in mind the short-term volatility.
What are your thoughts? Are you planning to buy gold at the new price levels? Share your opinion in Comments !