Thinking of accumulating gold because of the steep decline in prices in the past two weeks? Analysts feel this is not the time to go bottom fishing. Global gold prices touched a 5-year low of $1,090 per troy ounce (31.1 gram) on 22 July, down more than 42% from the all-time peak of $1,900 reached in September 2011. Though prices bounced back a bit on Thursday, experts feel more pain is in store. The metal is trading very close to the support level of $1,080. If it falls below $1,080, prices could recede by another 4-8% in the international market. “If the $1,080 support is broken, the next major supports are $1,040 and $990,” says CP Krishnan, whole time director, Geojit Comtrade.
However, the price may not fall too much because $1,000 per troy ounce acts as a long-term support. “It is the mining cost of gold,” says Krishnan. Even so, the rise may be capped by resistances. “Heavy long build up in gold happened between $1,130 and $1,230. All these bull operators are in losses now. They will try and recover their money once the gold price reaches $1,130-1,140. This range will now be a major resistance zone,” says Ram Pitre, an independent commodities analyst.
The cut in silver has been more severe. The white metal is down 70% from its all-time peak of $48.6 reached in April 2011. Silver has been hit badly because it also has industrial uses. The slowdown in China has pulled down prices to $14.71 per troy ounce. The downside is not capped here because its mining cost is around $10.
Source Credit: economictimes