During early trading on Monday, Indian equity benchmarks Nifty and Sensex both experienced a 1% drop, with the overall market capitalization of BSE firms decreasing from ₹320 lakh crore to nearly ₹316 lakh crore. Investors collectively lost about ₹4 lakh crore due to this decline. The Nifty50 opened at 19,539.45 and fell 0.90% to a low of 19,480.50, while the Sensex opened at 65,560.07 and declined 0.85% to a low of 65,434.61.
Although the markets recovered slightly after the initial fall, ongoing volatility is expected due to the Israel-Hamas war. The conflict, although localized to Israel and Palestine, has had a ripple effect globally. Crude oil prices surged over 4% due to concerns about supply disruptions, while gold prices also rose.
The surge in gold prices is attributed to rising uncertainty caused by the Israel-Palestine conflict. Gold opened higher at ₹57,000 per 10 gm on the Multi Commodity Exchange (MCX) and reached an intraday high of ₹57,400. In the spot market, gold was trading at around $1,850 per ounce.
Similarly, silver prices on MCX opened higher at ₹68,740 per KG and reached an intraday high of ₹68,980 per kg. In the international market, silver was trading around $21.80 per ounce.
Anuj Gupta, Head of Commodity & Currency at HDFC Securities, explained that gold and silver prices are rising due to uncertainty caused by the geopolitical tension in the Middle East. Investors are turning to these precious metals as a safe haven amidst the turmoil, potentially shifting their investments away from equities, mutual funds, and bonds.
Apart from the Israel-Palestine conflict, other factors affecting gold prices include upcoming economic data releases, such as the US Producer Price Index (PPI), FOMC meeting minutes, and Consumer Price Index (CPI). In Europe, data on Germany’s CPI, industrial production, Euro-zone’s Sentix investor confidence, and the UK’s monthly GDP will also be closely watched.
The US dollar’s performance is another critical factor. It has been under selling pressure, with the dollar index dropping below 106 levels and potentially heading toward 103 levels if it breaks its immediate support at 105 levels. A strong US jobs report for September raised expectations of another interest rate hike by the US Federal Reserve.
For those considering investments in gold and silver, Anuj Gupta suggested that gold has support at $1,835 and faces resistance at $1,880 per ounce in the international market. On MCX, gold has resistance at ₹57,800 and ₹58,300 per 10 gm. Silver has immediate support at ₹66,000 and is expected to reach ₹71,000 and ₹74,000 per kg in the near term. Gupta advised investors to maintain a “buy on dips” strategy as long as the Israel-Palestine conflict continues.
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