This week, there was a sharp fall in the prices of gold and silver, which created a stir among investors. A strong US dollar and signs of tight monetary policy put pressure on precious metals. Generally, during times of global stress, the demand for safe investment in gold and silver increases, but this time this trend appeared to be weakening.
On the Multi Commodity Exchange (MCX), gold closed at Rs 1,44,825 per 10 grams with a slight gain on the last trading day of the week. However, in the entire week it fell by about Rs 13,641, which is a decline of about 8.6%. A huge fall was also seen in silver. It gained about 2% in the last session, but on weekly basis silver fell to Rs 32,663. In this way a decline of about 12.6% was recorded in silver.
What was the main reason for the decline?
According to experts, the biggest reason behind this decline is the strength of the US dollar and the strict stance of the Federal Reserve. Apart from this, profit booking (profit booking) by investors also pulled down the prices. Although factors like ongoing geopolitical tension in the Middle East, rising crude oil prices and weak stock market usually support gold and silver, this time their impact was limited.
Which levels will be monitored next?
According to market experts, the level of Rs 1.42 lakh is very important for gold. If gold sustains above this level, it may rise again and prices may go up to Rs 1.50 lakh to Rs 1.52 lakh. If this level is broken, then gold can go in the range of Rs 1.35 lakh to Rs 1.40 lakh.
The zone of Rs 2.15 lakh to Rs 2.20 lakh is considered important for silver. If it goes below this level, silver can fall to Rs 2 lakh or Rs 1.80 lakh. If it remains above then a rise of Rs 2.40 lakh to Rs 2.50 lakh is possible.
Strength remains in the long term
However, despite the current decline, the demand for gold and silver remains strong in the long term. The demand for gold in India is between 700 to 800 tonnes every year, which shows its strong consumption. After the recent fall in prices, the market is seeing a return of buyers, especially in view of the wedding season.
What should investors do?
Experts believe that at present there may be fluctuations in the market, hence investors need to remain cautious. The strategy of buying on dips can be beneficial. Overall, there are signs of pressure in the short term, but in the long term gold and silver still remain strong investment options.