Gold prices surged 5% to cross $4,100 per ounce on Thursday following a sharp decline in crude oil prices. The recovery came after Democrats won control of the US Congress. Manoj Kumar Jain said, "bullion markets had already entered deeply oversold territory," leaving room for gains as inflation concerns eased.
Gold and silver prices will remain in focus on Thursday after a sharp overnight decline in crude oil prices, which recorded their biggest single-day fall since May this year.
Gold surged 5% to cross $4,100 per ounce, marking its biggest single-day gain since mid-August. Silver also climbed past the $50 per ounce mark, rising 6%. Both precious metals staged a strong recovery from October’s steep losses, with silver leading the gains. Lower borrowing costs and a weaker dollar provided further support to bullion prices.
In international markets on Wednesday, gold December futures settled at $4,073.00 per troy ounce, gaining 3.37%, while silver December futures closed at $52.282 per troy ounce, up 5.08%. Domestic futures also ended higher. Gold December contracts settled at Rs 1,43,234 per 10 grams, rising 2.71%, while silver December futures gained 4.47% to close at Rs 1,87,735 per kg.
The sharp correction in oil prices assumes significance as crude had rallied sharply following the US-Iran war. The decline eased concerns over further Federal Reserve rate hikes, providing a big boost to gold and silver.
Crude oil extended its losses and the dollar weakened after Democrats swept the midterm elections, winning control of both the Senate and the House of Representatives. The outcome has fuelled expectations that pressure on the Republican Party will intensify to bring the war with Iran to an end and negotiate a deal.
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Gold price outlook for November 5
Manoj Kumar Jain of Prithvi Finmart attributed the recovery to easing inflation concerns following the fall in oil prices, weakness in the dollar index, softer US bond yields and the possibility of an end to the US-Iran war. Jain added that bullion markets had already entered deeply oversold territory, leaving room for a recovery on the back of a positive trigger.
According to Jain, gold could extend its gains towards $4,140-4,220 if prices sustain above $4,000. Silver could move towards $55-57 per troy ounce if it holds above $52. However, both metals are expected to remain volatile this week amid fluctuations in crude oil prices, the dollar index and US jobs data.
For the international market, Jain sees support for gold at $4,022-3,980 per troy ounce, with resistance placed at $4,140-4,174. Silver has support at $51.20-50.00 per troy ounce and resistance at $54.00-55.20.
On the MCX, gold has support at Rs 1,42,000-1,41,400 and resistance at Rs 1,44,400-1,45,500. Silver has support at Rs 1,85,500-1,83,000, while resistance is placed at Rs 1,91,100-1,94,400.
Jain recommends buying gold in the Rs 1,42,400-1,41,000 range, with a stop loss below Rs 1,40,000 and a target of Rs 1,44,400-1,45,500. For silver, he suggests buying between Rs 1,86,000 and Rs 1,83,000, with a stop loss below Rs 1,79,800 and a target of Rs 1,91,100-1,94,400.
Gold long-term outlook
On the international front, Bank of America (BofA) expects gold prices to remain below $4,000 over the next three months, although it forecasts an average price of $4,000 an ounce in the fourth quarter. Its demand tracker indicates that purchases by key buyers declined 16.6% year-on-year. Imports into India fell 77.8%, while those into China rose 39.3%.
Jewellery demand has also come under pressure. World Gold Council data shows that jewellery demand declined 25% in the US, 15% in India and 28% in China during the second quarter.
Vice President JD Vance, in a lengthy post following the election defeat, said voter frustration over the war and the US-Israel relationship had contributed to the Republicans’ loss. Senate Minority Leader Chuck Schumer also pledged that Democrats would work towards ending the war soon.
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