With Diwali just three weeks away, we are entering a major festival season in India. Traditionally, buying gold during Diwali is considered auspicious and symbolizes prosperity and wealth.
Last year, in November (the month of Diwali), gold prices stood at Rs 59,448 per 10 grams, from where it has now increased by over 18%, largely driven by the increase geopolitical tensions in the Middle East and concerns about an economic slowdown following the Federal Reserve’s aggressive rate cuts.
Additionally, the impending US presidential election introduces a level of political risk, further catalyzing the precious metal’s rally.
“While a technical correction is possible given the rapid price rise in recent years, overall market sentiment remains strong. Any significant drop is likely to be considered a buying opportunity. The last quarter of 2024 will be crucial. If tensions in the Middle East worsen, gold’s rally could accelerate,” said Jigar Trivedi, senior research analyst, Currencies and Commodities at Reliance Securities.
Similarly, ongoing speculation about a recession or the slowdown in the US economy could push the yellow metal even higher. Uncertainties surrounding the outcome of the US elections also increase the upside potential, he added. With ongoing speculation over the Middle East crisis and the US economy, combined with the technical performance of the metal, the upside appears limited to Rs 80,000/10 grams. “However, predicting geopolitical developments is challenging. A de-escalation of conflicts could lead to a correction in gold prices as safe haven demand wanes. Additionally, if the U.S. economy shows signs of recovery, such as increased consumer confidence, job creation, lower inflation, increased household spending, and a rebound in manufacturing activity, fears of an economic slowdown may diminish, leading which would result in a significant drop in the price of gold. prices,” Trivedi warned.
“A price consolidation phase is expected ahead of the US general election amid weakening expectations of further 50bp rate cuts in November that may keep the sharp rise limited in the near term” said Naveen Mathur, Head of Commodities and Currencies at Anand Rathi Shares. and Stock Brokers.
However, it is worth noting that higher prices are expected to limit volumes in physical markets despite the start of the festive season in India.
(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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