Gold Prices Plunge Over ₹1,100 to Below ₹68,000; Silver Drops Over 4%—Is Now the Time to Buy?

Gold Prices on MCX Fall Over 7% or ₹5,000 in July; Key Support Level at ₹65,800

On Thursday, MCX Gold prices dropped over 1.5%, tracking declines in international bullion markets. Gold fell by ₹1,159, or 1.68%, to ₹67,793 per 10 grams, while silver plummeted more than 4%, with prices down by ₹3,343, or 3.94%, to ₹81,551 per kg.

Internationally, gold prices decreased as investors took profits ahead of key US economic data, which may provide insights into potential changes in interest rates by the central bank. Spot gold fell 0.9% to $2,377.29 per ounce, and US gold futures dropped 1.6% to $2,376.70.

Rahul Kalantri, VP of Commodities at Mehta Equities Ltd., noted, ‘We have seen significant drops in gold and silver prices in the Asian markets, driven by increased risk aversion due to growing economic concerns in China. However, the potential for Federal Reserve rate cuts in the upcoming September policy meetings could offer some support for prices.

Weakness in domestic gold and silver prices follows the government’s reduction of customs duties on these precious metals to 6%.

So far in July, MCX Gold has declined by over 7% or ₹5,000. Technically, gold faces significant support at the ₹65,800 level.

Jigar Trivedi, Senior Research Analyst – Currencies & Commodities at Reliance Securities, commented, ‘The 50% retracement level around ₹65,800 per 10 grams represents a crucial support point. After a period of consolidation, gold made a decisive move in July. While a pullback is possible, the overall outlook appears weak.

On the other hand, Trivedi suggests that factors such as festival season buying, a weak dollar, upcoming US elections, uncertainty around US Federal Reserve rate cuts, and safe-haven demand could provide short-term support for gold.

Meanwhile, silver prices have lagged behind gold recently, falling by nearly 9.2% or over ₹8,000. This decline is attributed to weakness in industrial metals, sluggish manufacturing activity in the US and the EU, and weak demand from China, all of which continue to pressure silver prices.

Trivedi stated, ‘Given the sharp decline in silver prices, a rebound is possible. However, the chart structure remains weak. For Comex Silver, this could mark the third consecutive monthly drop, with declines of 1.4% in May, 5.08% in June, and 4.4% so far in July. The overall sentiment in bullion commodities has turned weak, as the market has largely priced in a rate cut by the Fed for September, though uncertainty persists regarding Fed actions beyond that date.

Looking ahead, Trivedi indicates that ₹80,000 – ₹79,000 will serve as short-term support for MCX silver, with stronger support around the ₹73,000 level. For Comex silver, support may be found near $26.20 per ounce.

‘The outlook remains weak. The strategy should be to sell on any bounce,’ Trivedi advised.