Silver Slides from Record High—Is a Better Gold Entry Point Coming?

Gold prices remained stable with slightly upward movement and could not be influenced by the decline of silver prices on the Multi Commodity Exchange, as the investors decided to take the profits after the prices reached the highest level in recent times.

At around 9:10 a.m., gold for future delivery in February at MCX was Rs 1,32,599 per 10 grams, and the price was a little higher than the previous day. At the same time, MCX silver for March delivery was Rs 1,97,951 per kg and the price had come down by about 0.5 percent.

A considerable advance was seen for the entire base metals complex on Thursday. Silver futures even raised a fresh record of Rs 1,98,814 per kg momentarily but finally closed marginally below it. Likewise, gold contracts for February were also up and closed at Rs 1,32,469 per 10 grams.

The events were a reaction to the US Fed's rate cut of 25 basis points accompanied by hints that another cut might be coming next year. This change moved the dollar index to close to 98.30, thus gold became cheaper for overseas purchasers. The experts are of the opinion that the soft dollar, along with the weak rupee, is the reason why the local gold prices are being supported.

Prithvifinmart Commodity Research's Manoj Kumar Jain reported that after the FOMC meeting the dollar had need for both metals. He added that the traders’ focus is on the US inflation data and the workers’ numbers which would be released next week and hence would provide direction for the next move.

Market analysts are divided on whether it is a good time to buy or not.

Jain warns that the global market will be moving and the dollar will be volatile, which he expects to lead to larger daily price fluctuations. His advice is to wait for a dip before adding fresh long positions and to avoid short selling.

In anticipation of the international trading session, Jain has determined gold support at $4,264 and $4,220 and resistance at $4,355 and $4,400. The support for silver is put at around $63.50 and $62.40, while the resistance zones are seen at $65 and $67.40.

According to him, the MCX gold in the domestic market has support at INR 1,31,660 and INR 1,31,000, while it has resistance near INR 1,33,300 and INR 1,34,000. For silver, the support is seen at INR 1,96,600 and INR 1,94,400, with resistance bands at INR 2,00,000 and INR 2,04,000.

Jigar Trivedi from Reliance Securities has the same thought and suggests the investors to go for silver only after 7–10% dip in price either through futures or ETFs. He anticipates February gold futures will strive for the INR 1,33,000 mark for 10 grams.

Besides, Rahul Kalantri from Mehta Equities has the same approach and also provides some key levels. He sees $4,230 and $4,185 as the support for global gold and $4,310 and $4,345 as the resistance. For silver, the support is at $63 and $62.35, and the resistance is at $64.40 and $64.95.

In Indian currency, he estimates gold support at INR 1,31,450 and INR 1,30,550, while his resistance levels are INR 1,33,150 and INR 1,34,900. On the other hand, the level of support for silver is INR 1,96,950 and INR 1,95,200, while the resistance level is INR 2,00,550 and INR 2,01,700.

Given that global signals are mixed and traders are cashing in their profits close to record highs, the analysts believe that a more distinct trend might not become apparent until after the release of next week’s US data.