The impressive upward trend in the value of gold and silver may be losing momentum. Following a remarkable bull phase lasting two months, there are signs of a slowdown, leading investors to question whether it is the opportune moment to make a purchase or if it is advisable to hold off.
Gold recently concluded a nine-week winning streak by experiencing a decrease of over 3%, attributed to profit-taking by investors ahead of significant global events. As of Monday, December, the price of gold futures on the Multi Commodity Exchange (MCX) stood at approximately Rs 1,22,635 per 10 grams.
Deveya Gaglani, Senior Research Analyst – Commodities at Axis Securities, highlighted the end of the nine-week winning streak for Comex gold, with a drop exceeding 3%, due to profit-taking activities before the imminent meeting between President Trump and Xi Jinping.
Gaglani mentioned that advancements in US–China trade discussions have impacted the demand for safe-haven assets, as key negotiators reached a preliminary agreement following talks in Malaysia over two days.
Attention is now shifting towards central bank decisions, with the US Federal Reserve, European Central Bank, and Bank of Japan expected to provide policy updates.
Gaglani stated, “The Federal Reserve is widely expected to reduce interest rates by 25 bps after underwhelming CPI data last week, while both the European Central Bank and Bank of Japan are likely to maintain their current policy rates.”
In India, the demand for physical gold has softened due to the elevated prices. Gaglani noted, “In the local market, a strong support level is observed around Rs 1,17,000, with resistance anticipated near Rs 1,24,000.”
In essence, this suggests that gold prices may remain within a certain range in the short term, unlikely to experience significant declines but also encountering obstacles in rising substantially unless new global uncertainties emerge. For Indian investors, it might be prudent to observe and wait rather than rush into decisions.
CAUTION IN BULLION MARKET
The overall sentiment in the bullion market is cautious. Darshan Desai, CEO of Aspect Bullion & Refinery, mentioned, “Gold prices are on a downward trend as the demand for safe-haven assets weakens due to optimism surrounding a potential US–China trade agreement and a stronger US dollar.”
“This week is critical for the bullion market, with key events including meetings between US President Donald Trump and Chinese President Xi Jinping, a Federal Reserve announcement, and various major tech company earnings reports,” Desai added.
Desai advised investors to brace for volatility. “Positive developments in the trade agreement or further strengthening of the US dollar could lead to more profit-taking in gold. Additionally, a Federal Reserve statement hinting at fewer interest rate cuts than anticipated could exert further downward pressure on gold prices.”