After the gold price lost more than $300 per troy ounce from its record highs last week, some technical analysts have said that this correction provides a good buying opportunity. Though volatility is expected to remain at high levels in financial markets and weigh on price gains in many commodities in the coming weeks, gold has reached a technical level that should prove attractive to buyers. Gold, silver, palladium, copper, zinc and aluminum have been under heavy sales pressure since the middle of last week. Fears of a global recession among investors and high risks in the financial and banking sector resulted in a silver price plunge, in which the white metal lost nearly 30% of its value in just two trading days.
Despite the high volatility in commodity markets, Ashok Mittal of Emkay Commodities thinks that now is a good time to buy gold, and thinks that $1,610 will prove an area of price support on the charts. The yellow metal had room for a rally to the upside to at least $1,675 per troy ounce, as Mittal told CNBC TV-18 in an interview. Crucially as far as the world market is concerned, India's gold price will probably stabilise around 26,000 rupees per 10 grams. Mittal added that gold remains worth buying in the medium term, since the Indian demand for precious metals is expected to increase enormously in the months ahead. The Diwali festival of lights will kick-off this year's festival season, in which Indians traditionally give gold and silver as a present to friends and family members. The Indian rupee is likely to remain under pressure against the US dollar, giving further encouragement for Indians to buy gold.
In the case of silver, a leading commodities trader in Ahmedabad told EconomicTimes.com that many Indian brokers were working overtime hours on Saturday requesting that clients offset losing positions in silver futures. In addition, many clients of domestic brokerage firms are not being allowed to build up new silver positions at the moment; the market volatility is such that brokers do not want to expose themselves to the risk of huge losses stemming from their customers’ bad bets on silver futures. However, according to trader Mehul Shah, although silver has suffered a setback hardly anyone wants to offset long positions at these prices.