Should you buy gold after recent price drop following Union Budget 2024?

Gold rate on MCX fell more than 4% in July and experts believe it can be a good time to buy as gold prices began to pick up on Monday

Gold prices on the MCX traded higher on Monday, July 29, after dropping more than 4% overall in July. The fall was primarily due to the government announcing customs duty cuts on gold in the Union Budget 2024.

Gold prices on the MCX traded higher on Monday, July 29, after dropping more than 4% overall in July (Representational Image/Unsplash)

What are the current gold prices and the gold prices earlier in July?

Gold rates on the MCS was up by 0.35% or ₹242, trading at ₹68,428 for 10 grams, while silver gained even more at 0.66% or ₹538, trading at ₹81,909 per kg. Spot gold prices on the international market was $2,392.32, a gain of 0.21% or $5.13, according to Bloomberg data.

In the beginning of July, gold prices on the MCX hovered at ₹71,600 per 10 grams and hit a high of around ₹74,730 in the middle of the month. After the Union Budget 2024 was presented, the prices fell sharply, hitting a monthly low of around ₹67,400 last week.

What are some experts' views on gold prices?

However, gold prices are expected to rice due to increasing hopes of interest rate cuts by the US Fed, softness in US dollar index, escalating global geopolitical tensions, and increasing physical demand in domestic markets after duty adjustments, according to a Mint report, which quoted Ajay Kedia, Director, Kedia Advisory, who is also pessimistic on silver due to weak data from China and increasing gold-silver ratio.

The report also quoted Jigar Trivedi, Senior Research Analyst of Currencies & Commodities at Reliance Securities who said, “The Fed is likely to hold rates steady as the market largely discounts a rate cut in September. BoJ is forecast to increase the rate and the Bank of England may cut the rate under the new government. The dollar index is struggling around the 104.30 mark. Moreover, the US will also come out with July non farm payrolls number. Hence from an economic data point of view, the week is crucial.”