Gold prices are falling today. Is this a good time to buy?

old prices have recently experienced a significant decline, leading many to wonder whether now is the ideal time to buy. The current decline in gold prices comes after a period of volatility that was influenced by various economic and market factors.

Gold and silver prices were both volatile on Friday, rebounding from one-month and three-month lows, respectively. The initial decline earlier in the week was attributed to several factors.

First, the Indian government’s decision to cut tariffs on these metals in the Union Budget put downward pressure on their prices. Second, concerns about a slowdown in demand from China also contributed to the decline. Moreover, better-than-expected second-quarter US GDP data and jobless claims put downward pressure on gold and silver.

Despite these declines, there was some recovery towards the end of the week. This rebound was supported by hopes that the US Federal Reserve would cut interest rates, which helped lift gold and silver prices.

The dollar index’s decline from recent highs ahead of the Fed meeting also provided additional support for these precious metals. Additionally, US inflation expectations remained steady at 2.9%, which is in line with forecasts and offers further support.

Rahul Kalantri, Vice President – Commodities, Mehta Equities Ltd, said, “Gold has support at $2,378-2,362 and resistance at $2,412-2,428. Silver has support at $27.78-27.55 and resistance at $28.25-28.48. In INR terms, gold has support at Rs 67,980-67,750 and resistance at Rs 68,380-68,550, while silver has support at Rs 80,850-80,180 and resistance at Rs 81,890-82,500.”

However, market dynamics were not entirely favorable. Gold prices fell again on Monday, largely due to a stronger U.S. dollar, which hit a two-week high.

That has made gold more expensive for holders of other currencies. Investors are closely watching the upcoming U.S. Federal Reserve policy meeting for any hints of a potential interest rate cut in September, which could impact gold prices.

In China, gold consumption fell 5.6% in the first half of 2024 due to a drop in demand for jewelry. However, purchases of gold bars and coins rose.

Geopolitical tensions, especially in the Middle East, continue to support gold as a safe-haven asset. Additionally, gold ETFs (Exchange-Trading Funds) saw net inflows of 9.8 metric tons last week, marking the third consecutive month of net inflows.

In India, gold demand could rise by 50 metric tonnes in the second half of the year following a significant cut in the state tax on gold imports.

Prathamesh Mallya, DVP- Research at Angel One Ltd, said, “Gold ETFs recorded net inflows of 9.8 metric tonnes last week, marking the third consecutive month of net inflows. In India, gold demand could rise by 50 metric tonnes in the second half of the year following a significant reduction in the state tax on gold imports. Gold prices are likely to remain under pressure due to a stronger US dollar and anticipation of the Federal Reserve meeting.”

While gold prices have fallen, this could be a buying opportunity for some investors. However, the market remains impacted by a number of factors, including currency fluctuations, geopolitical tensions and expectations regarding U.S. monetary policy.