Gold, silver prices: Is it good to invest in gold now? What should your investment strategy be?

Gold prices on the Multi Commodity Exchange (MCX) opened on Thursday at Rs 59,210 per 10 grams and hit an intraday low of Rs 58,819l. In the international market, prices hovered around $1,935.40 per troy ounce. Meanwhile, silver opened on Thursday at Rs 72,549 per kg and hit an intraday low of Rs 71,182 on the MCX. The price hovered around $23.46 per troy ounce in the international market.

Anuj Gupta, Vice President of IIFL Securities, said, “Yesterday gold prices closed with flat note at Rs 59,300 levels. In the international market, it is trading at $1,934 levels per ounce. The hawkish US Federal Reserve statement is negative for gold prices as they may further increase interest rates two times. However, they kept no change in rates this time. We also noticed the negative trend in gold prices due to positive US inflation numbers, and demand for gold faded out.”

He sees technically strong support at Rs 59,000 levels and then Rs 58,700 levels, Resistance at Rs 59,500 and Rs 59,900 levels. One can sell around Rs 59,500-59,600 levels with a stop-loss of Rs 59,900 and for the target of Rs 59,000 to Rs 58,900 levels. Gold may test $1,930 levels in international markets.

Manav Modi, Analyst, Commodities and Currencies, Motilal Oswal Financial Services Ltd. (MOFSL), said, “Gold and silver prices slipped as treasury yields and dollar index rebounded, following the Federal Reserve’s widely expected pause on interest rate hikes, although hints of a further increase pinned bullion lower. A day before the Fed meeting, US inflation data was reported at 4% against the previous data of 4.9%, which supported the metal prices on the lower end. The Fed kept its interest rate unchanged for the first time in more than a year following 10 consecutive increases but signalled its intention to implement further rate hikes.”

Modi added, “In new economic projections, the Fed signalled that a stronger than expected economy and a slower inflation decline will likely increase borrowing costs by another half-percentage point by the end of this year. Meanwhile, Governor Powell said it is too soon to say inflation will continue to retreat even as officials expect price pressure to stay on a cooling trend. A policy meeting from the ECB is also scheduled today, wherein they are expected to raise borrowing costs to their highest level in 22 years and leave the door open to more hikes. Focus today will also be on the US Retail sales and Industrial production data.”

Is it good to invest in gold? What should be the investment strategy to buy gold? 

Gold has gained around 10% year-to-date on the back of slower global growth and change in the interest rate hike cycle, geopolitical uncertainties and stress in the US banking sector that led to the default of some regional banks. However, gains were capped as the dollar index and yields recovered from recent lows. Modi said, “Higher gold prices dented investment demand, leading investors to diversify their portfolio in riskier assets. Central banks have been building up their gold reserves in the last couple of years, contributing to the gold rally. After a sustained rally in gold, some correction is warranted, but we expect momentum to still remain strong. From a medium-term perspective, we could see this dip extending towards Rs 57,000-58,000, which could be a good level to accumulate for the targets of Rs 63,000 once again. We advise investors to diversify their portfolio and allocate around 10% of gold in their kitty.”