All targets achieved in Gold above $2400 and Silver around $30… Price Retracement expected In the short-term…

By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all

Gold prices have sky-rocketed to trade at a record high price of $2448.75 (Rs 73958) and Silver to $29.90 (Rs 86093) amid heightened geopolitical tensions in the Middle East and speculative buying. We released a Knowledge series report one week back, “$2300/ Rs 70000, Target achieved in Gold. What can be the next move?”, where a target price of $2400 (around Rs 73000) for gold was predicted, and that price has already been reached yesterday. Also as per the last Weekly Blog “Target $27 achieved in Silver; what next? “ and Knowledge Series “Gold and Silver expected to rise 10% and 20% respectively in 2024”, Silver has almost achieved the target of $30 (~ Rs 86000) yesterday.

Probable reasons for recent Gold and Silver parabolic move towards $2400 and $30 respectively:

  • Portfolio diversification and increasing allocation in Gold by Ultra HNI Investors
  • Safe-heaven buying by speculators around the world amid Middle East tensions
  • High paper trading by speculators in far-month future contracts at various exchanges
  • Central Bank buying for diversification and de-dollarisation from the OTC market
  • Expectations of Debt crisis or Recession going forward, due to alarming high levels of US Fiscal Debt and Trade disruptions
  • Renewed buying Interest in Equity, Commodity and Cryptocurrency markets

Gold and Silver have started their new structural bull market, but it seems, that prices have discounted all positive factors very quickly and have ignored all negative developments in the past month. So it seems that gold and Silver prices are ripe for a healthy correction and price retracement and prices have topped out in the short term due to the following reasons:

  • Technically overbought oscillators
  • Cooler than expected US Inflation data last month 
  • Shifting of US Interest rate cut from June to September
  • Elevated Dollar Index and US Treasury Yields
  • ETF Buying missing

It seems the top has been made in the short-term for both Gold and Silver. We can see profit booking and price retracement next week. Technically bearish Inverted Hammer has been formed on Gold Daily charts, which shows a reversal pattern. Moreover, RSI was also in the overbought zone for a long time. Therefore, the next Important support for Gold is a 23.6% retracement of $2345 (~Rs 71000) and then a 38.2% retracement of $2280 (~Rs 69000).

Indian Gold Daily chart

Moreover, the rally which started in Silver from Rs 68000 to Rs 86000 is expected to retrace by 23.6%to $28 (~Rs 81800) and 38.2% to $27 (~Rs 79200).

India Silver Daily chart

Disclaimer: This report contains the author’s opinion, which is not to be construed as investment advice. The author, Directors, and other employees of Augmont Enterprise Private Ltd. and its affiliates cannot be held responsible for the accuracy of the information presented herein or for the results of the positions taken based on the opinions expressed above. The opinions mentioned above are based on information, which is believed to be accurate, and no assurance can be given for the accuracy of the information. The author, directors other employees and any affiliates of Augmont Enterprise Private Ltd cannot be held responsible for any losses in trading. In no event should the content of this research report be construed as an express or implied promise, guarantee or implication by or from Augmont Enterprise Private Ltd. that the reader or client will profit or the losses can or will be limited in any manner whatsoever. Past results are no indications of future performance. Information provided in this report is intended solely for informative purposes and is obtained from sources believed to be reliable. The information contained in this report is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. We do not offer any sort of portfolio advisory, portfolio management or investment advisory services. The reports are only for information purposes and are not to be construed as investment advice.

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