Around noon on the Multi Commodity Exchange (MCX), gold futures were down by ₹110 at ₹70,589 per 10 grams.
Despite the drop, gold prices are well-supported.
“Gold remains firm above $2,450 per ounce (₹70,500 per 10 grams) due to ongoing geopolitical worries in the Middle East,” said Renisha Chainani, Head of Research at Augmont.
“The situation with Hamas and the potential for a larger conflict are adding to gold’s appeal as a safe-haven asset,” Chinani said.
Further, the US Dollar is at its lowest in nearly a week.
This shift is expected to benefit gold, especially with the focus on the US Consumer Price Index (CPI).
“If the CPI data is weaker than expected, it could boost gold prices further,” Chainani added.
Inflation data may impact gold prices
The US headline CPI is projected to fall from 3.0% to 2.9% year on year for July, while core CPI is expected to rise to 3.2%.
Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions Limited, noted, “If inflation rises faster than anticipated, it might lead to a reassessment of the Federal Reserve’s rate cut plans. However, if CPI meets or falls below expectations, gold could see new highs, potentially surpassing $2,500 per ounce (₹72,000 per 10 grams).”
Market focus on geopolitical developments
As global tensions continue, investors are keenly watching the Iran-Israel conflict.
“Gold often becomes more attractive during such geopolitical uncertainties,” Kothari added. “We may soon see gold reaching new highs if investment demand remains strong.”
Investment strategy
Here are some strategies to consider:
Long-term investment: If you believe in the long-term stability of gold as a safe haven, this dip could be a chance to buy and hold.
Gold often performs well during periods of geopolitical uncertainty and inflationary pressures.
Diversification: Adding gold to a diversified portfolio can provide a hedge against market volatility.
Consider increasing your gold holdings if your portfolio lacks exposure to precious metals.
