Should you buy gold & silver this month?

Gold futures for June 5 delivery gained by Rs 1,471, or 2.1 per cent, in May while the August 5 contract appreciated by Rs 1,323, or 1.9 per cent, to settle at Rs 71,886 and Rs 71,834, respectively. That while the Ahmedabad spot price increased by Rs 598, or 0.8 per cent, to Rs 72,127 per 10 grams.   

Silver futures for July 5 delivery zoomed by Rs 10,719, or 13.3 per cent, to Rs 91,570 last month, while the Ahmedabad spot rate surged by Rs 12,373, or 15.5 per cent, to Rs 92,323 per kg. 

Spot gold - the international benchmark for the yellow metal - rose by $42.4, or 1.9 per cent, in May, having gyrated within a $173 range - between $2,277.5 and $2,450 - in intraday trade. 

The dollar index - which gauges the greenback against six peers other than the rupee - finished May 1.4 per cent weaker, while the rupee stayed steady around 83.42-83.43 levels against the American currency. 

Signs of profit booking have emerged in gold as prices approached crucial resistance levels, and while there may be attempts to retest recent highs in days ahead, supply pressure is anticipated to induce a correction in prices, Sugandha Sachdeva, Founder of SS WealthStreet, told Zeebiz.com.

Sachdeva expects yellow metal prices to correct initialy towards the Rs 70,000 per 10 grams mark over 1-2 months, followed by a gradual drift lower towards Rs 68,000-67,800 per 10 grams levels.  

Silver prices faced hurdle around Rs 96,000 per kg, and a breach of support at $30 per ounce and Rs 90,500 per kg on a closing basis triggered a correction in prices which can stretch towards towards Rs. 84,000-85,000 per kg levels in June, according to the analyst.

Many analysts hold the view that gold and silver are in a long-term uptrend owing to several factors.

Factors such as the anticipation of a monetary easing cycle by the Fed in the second half of the year alongside ballooning US national debt, continued central bank gold purchases in large quantities, and the safe-haven appeal of gold amid economic instability support a higher allocation towards gold and silver in investment portfolios this year, said Sachdeva. 

"These factors collectively could contribute to the rising prices of gold and silver in 2024, reflecting a blend of economic, geopolitical, and monetary dynamics that influence investor behavior and market trends," Sachdeva added.

Gold prices are expected to trade in the range of $2,280-2,400 per troy ounce or Rs 70,300-73,500 per 10 grams while silver prices are likely to trade in the range of $28.80-32.70 per ounce or Rs 89,800-98,000 per kilogram in June, according to Manoj Kumar Jain, Director-Head Commodity and Currency Research at Prithvi Finmart.

“While gold has gained amid robust demand from global central banks, geopolitical tensions and interest rate cut possibilities, silver has shown strength due to robust industrial and investment demand,” added Prithvi Finmart's Jain.

Sachdeva suggests buying gold and silver in a staggered manner given that both precious metals are in a persistent uptrend despite potential corrective phases. 

Gold and silver can be accumulated at levels of around Rs 68,000 per 10 gm and around Rs 86,000-85,000 per kg, respectively, she adds. 

Sachdeva expects gold and silver to resume their upward trajectories following a brief period of consolidation to potentially head towards Rs 80,000 per 10 gm and Rs 1,02,000 per kg levels by Diwali or New Year.

Kedia Commodities MD Ajay Kedia suggests buying gold futures, which he believes have support at Rs 70,500, around Rs 71,000 levels and silver around Rs 88,000.

Kedia expects silver futures to register a new high soon.