With the festive season of Dhanteras and Diwali fast approaching, investors and jewellery buyers are closely monitoring gold price movements. While international markets show signs of recovery, domestic bullion prices continue to exhibit rangebound trading, creating a dilemma for potential buyers.
International and Domestic Market Trends
On Wednesday, November 4, international spot gold saw a slight increase, edging up 0.18% to approximately $3,947 per ounce in early Asian trade. This recovery is partly attributed to a decline in crude oil prices, which have fallen to their lowest levels in nearly four weeks. Reduced crude prices typically ease inflation concerns, potentially giving the US Federal Reserve more flexibility to adjust its interest rate policy, a factor that could support gold.
However, the domestic market presents a different picture. On the Multi Commodity Exchange (MCX), gold futures were trading around ₹1,39,180 per 10 grams, reflecting a modest decrease of 0.20%, or nearly ₹280. A significant factor influencing domestic gold prices is the strengthening of the Indian rupee against the US dollar. A stronger rupee makes dollar-denominated gold imports more affordable, which in turn can alleviate upward pressure on local prices.
Expert Outlook and Key Levels
Vandana Bharti, a commodity analyst at SMC Global Securities, suggests that gold appears relatively stronger in the short term. She views the current consolidation phase as a potential foundation for a subsequent upward movement. For COMEX gold internationally, sustaining above the critical $4,000 per ounce level is crucial. A decisive breakthrough could propel prices towards $4,200, with $3,900 acting as a significant support level.
Domestically, Bharti anticipates MCX gold moving towards ₹1,42,000 per 10 grams, with a support level identified at ₹1,37,000. As the festive buying season intensifies, market participants will be keenly observing whether gold's current consolidation evolves into a sustained recovery. For buyers, the key strategy involves tracking price movements diligently and refraining from treating any price target as a guaranteed outcome.
Geopolitical and Economic Influences
Beyond market fundamentals, several geopolitical and economic developments are impacting investor sentiment. Upcoming peace talks between Russia, Ukraine, and the US scheduled for November 10-11 in Abu Dhabi are on the radar. Additionally, ongoing uncertainty surrounding the Iran-US conflict continues to sway market dynamics.
Domestically, the outcomes of the US midterm elections and forthcoming labor market data could provide further insights into the Federal Reserve's future monetary policy decisions, which in turn will have implications for global gold prices.