Gold and silver prices sharply rose ahead of the Dhanteras festival

There is a significant rise in gold prices. Over the past five years since Dhanteras, gold prices have increased by 200 percent. According to Axis Direct, gold could yield a return of 20–25 percent by the next Dhanteras, with a target price ranging from 165,000 to 171,000 rupees per 10 grams.

Axis Direct noted that the domestic market price of gold has risen from 47,600 rupees per 10 grams in November 2021 to approximately 142,750 rupees per 10 grams. This represents an impressive increase of 24.53 percent in annual compounding.

Since the last Dhanteras, gold has shown a return of about 8 percent, which significantly surpasses the performance of the Sensex and Nifty indices. Nevertheless, gold is trading at a discount of more than 22 percent from its peak value of 180,000 rupees, and domestic prices are around 142,000 rupees per 10 grams.

Geopolitical tensions in the Middle East, the strengthening dollar, and interest rate hikes by the Federal Reserve are putting pressure on prices, raising concerns about the sustainability of gold's long-term upward trend. Previously, gold and the dollar index had an inverse correlation. The recent 4 percent rise in the dollar index has strongly impacted gold, confirming the trend that gold typically performs poorly when the dollar and bond yields rise.

Despite this, gold's growth is supported by consistent central bank purchases and inflows into ETFs. It was observed that current gold prices look attractive to investors as they have fallen by more than 20 percent from their peak. This presents a good opportunity for long-term investors who missed the rally to gradually add gold to their existing portfolios.

Internationally, the price of gold is set in US dollars, and India imports most of its gold requirements. Consequently, the exchange rate plays a crucial role in shaping domestic gold prices. When the rupee weakens, more rupees are required to purchase the same volume of gold, even if international prices remain unchanged. This increases the cost of imported gold and supports domestic prices.

From a technical perspective, Axis Direct reported that MCX Gold faced strong resistance at the 160,000 rupee level, which has gradually turned into a supply zone as prices have repeatedly attempted to stay above this level over the past seven months. Furthermore, a weekly close below the 20 EMA in September would weaken the bullish outlook.

Following a prolonged slump in the prices of gold and silver, a turning point occurred, which was a significant disappointment for those who expected further decreases in the cost of these precious metals. After a slight drop in the first two days of the current week, prices for gold and silver suddenly began to rise rapidly, and this increase continues into Thursday.

On the Multi Commodity Exchange (MCX), the price of silver reached 1.90 lakh rupees per kilogram, while the price of gold exceeded 1.45 lakh rupees.

An analysis of gold futures prices on MCX shows that at the beginning of the trading day on Thursday, the price of 10 grams of 24-carat gold with a December 4 expiry reached 1,46,109 rupees. This is significantly higher than the closing price of the previous business day on Wednesday, when it was 1,43,234 rupees, indicating an increase of 2,875 rupees for 10 grams.

Significant volatility in gold prices was also observed in early November. A major decline, known as the Gold Rate Crash, occurred in October, and a decrease was also recorded in early November. For instance, 10 grams of gold cost 1,49,036 rupees on September 30 but fell to 1,38,485 rupees on October 30, representing a loss of 10,551 rupees for 10 grams. However, since the last business day of October, the price has increased by 7,624 rupees.

In addition to gold, there was also a substantial change in silver futures prices on MCX. The price of 1 kg of silver, which dropped to 1,79,698 rupees on Tuesday, rose to 1,87,735 rupees on Wednesday due to the rally, and this growth continued on Thursday. Although this increase is not as large as the previous business day, the price of 1 kg of silver rose by 3,211 rupees, reaching 1,90,946 rupees.

Looking at the silver price rally, it can be noted that over two days, the value of silver increased by more than 11,000 rupees per kilogram. Comparing the prices on Tuesday (1,79,698) with the current ones, the price increase for 1 kg of silver with a December 4 expiry amounted to 11,248 rupees per kilogram.

Previously, in October, silver prices surprised investors holding these assets but simultaneously provided a favorable opportunity for new buyers. Throughout the month, silver prices experienced a crash. On September 30, the MCX Silver Price was 2,23,706 rupees, and on October 30, it fell to 1,79,132 rupees per kilogram, representing a drop of 44,574 rupees over the month.

There is a constant change in the prices of gold and silver. On Wednesday, fluctuations in the value of precious metals occurred again on the Multi Commodity Exchange (MCX), with the price of silver falling significantly and becoming cheaper than its previous high level. This presents a favorable opportunity for those planning to purchase silver during the holiday season.

According to MCX data, when it opened on Wednesday, December 4th, silver began trading at 177,600 rubles per kilogram. On the previous trading day, this metal commodity closed at 179,698 rubles. Thus, the cost of one kilogram of silver decreased by 2,098 rubles.

Analyzing the dynamics over the last month, from October 4th to November 4th, shows a significant drop in the price of silver. On October 4th, when trading on MCX ended, the price was 237,658 rubles per kilogram. By the start of trading on Wednesday, November 4th, silver had fallen to 177,600 rubles, which means a decrease of 60,058 rubles over this period.

If we look at the drop in the silver price relative to the historical maximum, the MCX Silver Price exceeded the 400 thousand rubles mark per kilogram for the first time at the end of January this year, reaching a peak of 420,048 rubles per kilogram. Compared to current prices, 1 kg of silver is now available 242,448 rubles cheaper than its maximum.

Additionally, updates were provided on the gold exchange rate on MCX. The price of 10 grams of 24-carat gold with an expiration date of December 4th closed at 139,452 rubles the previous day. On Wednesday, immediately after the futures trading began, this yellow metal slightly decreased to 139,177 rubles, but then showed an increase of approximately 150 rubles.

Similarly to silver, there was a change in the price of gold over the last month. On October 5th, the futures price for gold was 149,316 rubles for 10 grams, and on November 4th, it fell to 139,177 rubles, corresponding to a decrease in gold by 10,139 rubles over the month.