Gold Prices May Rise by Rs 18,000: Bullion Experts Suggest Buy-Sell Strategy

New Delhi, July 26, 2024 – Gold prices have seen a notable drop recently, presenting what experts describe as a prime buying opportunity. Following the import duty cut in the Union Budget 2024-25 and pressures on international prices ahead of the US elections, gold prices in India have fallen by as much as Rs 4,000. Bullion experts suggest that investors should consider buying gold now and look to sell when prices reach Rs 72,000, as global cues indicate a potential rise.

Significant Buying Opportunity

Jateen Trivedi, vice-president of research (commodity and currency) at LKP Securities, emphasized the current scenario as a significant buying opportunity. He stated, “The recent dip in gold prices to around Rs 70,000 from Rs 75,000 presents a significant buying opportunity. With New York-based Comex gold recently hitting $2,500 for the first time, this drop marks the largest single-day decline in rupee terms, falling by Rs 4,200. Buyers should consider increasing their allocation to gold, especially given the potential for higher capital gains tax on equities, which could reduce returns in that asset class.”

Current Gold and Silver Rates

As of today, 24k gold prices in Delhi stand at Rs 68,100 and Rs 67,800 per 10 grams for 999 and 995 purity, respectively. Silver is priced at Rs 82,000 per kg.

Market Outlook

Sarvendra Srivastava, a global market strategist and researcher, shared insights on the gold market outlook. “In the spot market, the MCX rate is not the real price of gold, as it also involves currency exchange rates and duties. Currently, gold at the London bullion exchange, from where the entire world takes prices, is $3,000 but we are at around $2,400. So, there is a scope for gold to rise Rs 18,000 in order to bridge the gap of these 600 points,” Srivastava said.

Buy-Sell Strategy

Jateen Trivedi advised accumulating gold at current levels. “Accumulating gold at current levels is advisable,” he said. On the selling strategy, Trivedi suggested that gold prices might fall again after reaching Rs 72,000, as they face pressure from the US-based Comex. “Consider selling gold when prices reach around Rs 72,000, which is expected to act as a major resistance level. This aligns with Comex Gold facing resistance at $2,500-$2,525 until interest rate cuts start being considered,” he added.

Impact of Federal Reserve’s Review

The US Federal Reserve is scheduled to review its interest rates on July 30-31, with the outcome expected on July 31. Any reduction in interest rates could make gold cheaper in India, providing further impetus for investment.

Budget 2024’s Impact on Gold

The Union Budget 2024-25 announced several measures impacting gold investments:

• Import Duty Cut: Import duties on gold and silver have been reduced to 6%, down from 15%, helping to lower prices and benefit long-term investors.
• Long-Term Capital Gains (LTCG) Tax: The LTCG tax has been reduced to 12.5%, although indexation benefits have been removed.

Conclusion

Given the recent price drop and favorable budget changes, experts suggest the following strategies for gold investors:

• Increase Allocation: Utilize the current price dip to buy gold in lump sums.
• Strategize Selling: Aim to sell around Rs 72,000, considering the long-term positive outlook driven by expected interest rate cuts.
• Leverage Tax Benefits: Capitalize on the reduced capital gains tax and import duty cuts to enhance long-term returns on gold investments.

Investors should stay informed and consider these strategies to maximize their returns amidst the dynamic market conditions.