International market signals are important for people preparing to buy gold on the occasion of Diwali. US Federal Reserve's policy on interest rates, global tensions and festive demand in India may impact gold prices in the coming days.
Tezzbuzz Desk-Buying gold during Diwali is considered auspicious for Indian families. In such a situation, buyers are keeping an eye on the changes in gold prices before the festival. After the US Federal Reserve did not change the interest rates, the discussion about the further movement of gold has intensified in the market. However, this does not guarantee a sustained fall or rise in prices. The trend of gold in the coming days will depend on many domestic and international factors.
According to commodity expert Anuj Gupta, there may be a possibility of stability in gold prices due to no change in interest rates. But the signs of stability and continued bullishness in the market are different. Therefore, buyers should pay attention to the current price and market trend before buying gold.
Will keep an eye on the movements of the international market
According to the given market data, the price of gold in the international market remains under pressure at $ 4,120 per ounce and the price of 10 grams of gold on Multi Commodity Exchange (MCX) remains below the level of Rs 1.46 lakh. If the prices in the domestic market come around Rs 1.40 lakh per 10 grams, then there may be a buying opportunity for buyers. However, just looking at international prices is not enough when predicting gold prices. The exchange rate of rupee and dollar also plays an important role in the Indian market. If the rupee weakens, gold may become expensive in India despite the price remaining stable in the international market.
The direction may be decided by the Fed's decision in December
The monetary policy of the US Federal Reserve is also one of the major factors affecting gold prices. When interest rates rise, interest bearing options may become more attractive for investors, whereas gold does not provide regular interest. In such a situation, the fear of increasing interest rates may put pressure on the demand for gold. According to the given data, the probability of the US Fed increasing interest rates in December is said to be 78 percent. If this apprehension persists in the market, gold prices may continue to fluctuate. However, only the Fed's final decision and its signals regarding further policy will clarify the direction of the market.
Support is coming from festive demand in India
Amidst the uncertainty in the international market, the demand for gold is getting support during the festive season in India. According to India Bullion and Jewelers Association (IBJA), good purchasing of gold has been seen across the country in the last five days. Due to increase in demand, discount on gold in the domestic market has also reduced. Festive demand may support prices, but global economic conditions and investor sentiment are equally important. Therefore, it is not certain that prices will continue to rise due to increasing demand.
What should those buying gold do on Diwali?
If you are planning to buy gold on Diwali, it would be better to decide according to your budget and needs rather than just waiting for the prices to fall. Compare the price of 24 carat and 22 carat gold in the local market before purchasing. Also, while buying jewellery, be sure to inquire about the making charges, hallmarking and other charges included in the final bill.
Overall, the possibility of further stability in gold prices may bring relief to buyers, but it would not be appropriate to claim a big fall or rise at the moment. The direction of gold before Diwali will depend on the next decision of the US Fed, the movement of the rupee against the dollar, global tensions and domestic demand.