Gold and Silver Market Outlook: Insights from Anand Rathi on Precious Metal Prices Amid Dollar Fluctuations
Gold prices are expected to remain stable amid ongoing global uncertainties, according to Naveen Mathur, Director of Commodities and Currencies at Anand Rathi. In a recent interview, Mathur highlighted that the dollar and rupee are likely to trade within narrow ranges due to tariff tensions and geopolitical risks that continue to create market volatility. He noted that while the dollar index recently peaked at a three-month high, it has since eased, reflecting a complex interplay of international political developments.
Dollar Index Trends and Market Volatility
The dollar index reached a three-month high of 99.56 on October 9 but has since retreated to 98.92, marking a week-on-week increase of approximately 1.28%. Mathur attributed this fluctuation to a weaker euro, influenced by political changes in France, and a dovish monetary policy from Japan, which has led to a decline in the yen’s value. He anticipates that the dollar index will continue to experience high volatility, predicting a trading range between 96 and 97 on the downside and 99 to 100 on the upside, although he considers it unlikely to breach the 100 mark this week. The ongoing U.S. government shutdown and renewed tariff concerns with China are contributing factors to the dollar’s current performance, as other global currencies also show signs of weakness.
Rupee Stability Amid Central Bank Intervention
The Indian rupee has exhibited signs of stability, with Mathur indicating that the Reserve Bank of India (RBI) is actively intervening to maintain its value. He suggested that the RBI appears comfortable with the rupee trading between Rs 87 and Rs 88 per dollar, aiming to sustain stability within this range. Mathur predicts that the rupee will fluctuate within a narrow band of Rs 87.50 to Rs 88.50, with limited depreciation expected beyond Rs 88.50. This stability is crucial for the domestic economy, especially as it relates to gold prices during the festive season.
Gold and Silver Prices Driven by Demand
Gold and silver have both seen significant gains this year, bolstered by safe-haven demand and festive buying. Mathur emphasized that ongoing uncertainties surrounding trade tariffs, particularly between the U.S. and China, continue to support gold prices. He noted that if the dollar weakens slightly, it could further enhance the appeal of dollar-denominated commodities like gold. With the rupee unlikely to appreciate significantly, domestic gold prices are expected to remain firm throughout the festive period. Silver prices have also surged, recently surpassing their 2011 highs, reflecting a tight supply scenario. Mathur pointed out that global silver production has been in deficit for several years, leading to a substantial decrease in inventories at the London Metal Exchange.
Investment Strategies for Traders
For traders looking to navigate the current market conditions, Mathur recommends a buy-on-dips strategy for both gold and silver. He provided specific trading suggestions for the MCX December contracts, indicating that gold is currently priced around Rs 1,23,700 per 10 grams, with support levels at Rs 1,21,200 and Rs 1,20,000. He advises buying near Rs 1,23,500, with a target of Rs 1,24,500. For silver, currently priced at approximately Rs 1,52,000 per kg, he suggests buying near Rs 1,51,000, targeting Rs 1,53,000. Mathur believes that both metals are on a positive long-term trajectory, and short-term corrections may present fresh buying opportunities for investors looking to capitalize on the next market rally.
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