Gold price: Top 5 triggers that may dictate yellow metal price in short term
Premium- Gold prices erased its previous week’s gains last week as the 'safe-haven' demand dimmed amid progress in Russia-Ukraine peace talks
Gold price today at Multi Commodity Exchange (MCX) is quoting at ₹51,275 per 10 gm levels as MCX gold April future contract ended at this level on Friday. Spot gold price too has retraced from its recent high of $2070 levels and touched $1924 per ounce levels.
According to commodity market experts, yellow metal prices erased its previous week’s gains last week as the 'safe-haven' demand dimmed amid progress in Russia-Ukraine peace talks. Gold price sentiments turned bearish earlier last week as Russia promised to scale down military operations around Kyiv. However, there is still a lot of skepticism with no signs of solid de-escalation. Apart from this, Dollar Index has once again started ascending while US Fed has already signaled about 50 bps interest rate hike in next meeting. These triggers are expected to keep a tab on sharp rise in precious bullion metal price in short term.
Here we list out top 5 triggers that may dictate gold price in short term:
1] Dollar Index: Speaking on how movement in US dollar is affecting gold price today; Amit Sajeja, Vice President — Research at Motilal Oswal said, "Recently, we have witnessed sharp upside move in Dollar Index that has worked as a check on sharp upside in yellow metal price in spot market. However, it would be interesting to see whether this rise in US dollar sustains at current levels or it would retrace this week as we saw in the case of Euro last week. Any rise in Dollar Index further will keep containing the sharp upside move in gold price."
2] Russia-Ukraine news: "Gold prices erased previous week’s gains last week as the metal’s safe-haven demand dimmed amid progress in Russia-Ukraine peace talks. Sentiments turned bearish for the metal earlier in the week as Russia promised to scale down military operations around Kyiv. However, there is still a lot of skepticism with no signs of solid de-escalation, which further supported the precious metal around the psychological level of $1900 per ounce mark, amid a flight to safety," said Sugandha Sachdeva, VP — Commodity & Currency Research at Religare Broking Ltd.
3] US Fed interest rate hike: "US Fed has a tendency of preparing the markets ahead of its scheduled meeting. Its recent statements to increase interest rate by 50 bps should be seen from this angle. However, actual outcome of the US Fed meeting is yet to come and hence one should keep an eye on the US Fed meeting and their officials statements ahead of its next meeting," said Anuj Gupta, Vice President at IIFL Securities.
4] US data: Recently, US has been able to report positive data on bond yield but inflation is expected to remain a big worry. Though, US Fed has indicated that they would be increasing interest rate by 50 bps in next meeting, how its decision to increase interest rate by 25 bps has worked out is important. So, next US inflation data would be important and gold investors are advised to keep themselves updated with latest US inflation data.
5] Rupee vs dollar: "Apart from global triggers, one needs to remain vigilant about the domestic triggers as well. After ease in Russia-Ukraine tension, crude oil prices have come down that has strengthened Indian National Rupee against the US dollar (USD). However, in case of no further positive development in Russia-Ukraine peace talks, crude oil may start surging upside again. In such a scenario, out dollar flow will scale northward as we import near 85 per cent of our net oil demand," said Anuj Gupta of IIFL Securities.
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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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