MCX gold rate retraces from record high. Should you buy or wait for more dip?
4 min read . Updated: 08 Apr 2023, 07:22 AM IST
Premium- Gold rate today is in uptrend despite sell off as Dollar Index hitting two month low has fueled demand for yellow metal
Gold rate today: Amid speculations of US Fed's interest rate pause, soaring crude oil prices and weakness in the US dollar, gold prices zoomed to another record high of ₹61,180 per 10 gm at the domestic markets, and in the international markets too, yellow metal prices extended their rally to breach the key resistance of the $2000 per ounce mark, gaining around 2 per cent in the week gone by.
According to commodity market experts, gold prices are in 'persistent uptrend' as US Dollar Index tumbled to two months low after US Fed's dovish stance on interest rate hike provided fodder to the speculations in regard to rate pause. Apart from this, spurt in crude oil prices last week also fueled concerns about inflation. Experts said that $1980 and $1945 are key support area for the precious yellow metal in international market whereas ₹59,700 per 10 gm and ₹58,500 per 10 gm is major cushion for the gold prices on MCX.
Why gold price is rising?
Highlighting the reasons for gold price rally, market expert Sugandha Sachdeva said, "It has primarily been the weakness in the dollar index towards a two-month low and hopes that the US central bank is nearing the peak of its tightening cycle, which is buoying prices. The yellow metal is in a persistent uptrend, and even as some retracement was witnessed in prices after the sharp run-up, closing above $2000 per ounce is indicating that prices are gearing up for another leg of an up move."
Sugandha went on to add that the sharp spurt in crude oil prices for the week as OPEC+ producers shocked the markets by announcing fresh production cuts of 1.16mbpd has again sparked worries about sticky inflation globally, which is somewhat a negative trigger for prices. It suggests that interest rates will remain high for a prolonged period to tame high and ingrained price pressures.
Pointing towards weak US economic data, Nirpendra Yadav, Senior Commodity Research Analyst at Swastika Investmart said, "US jobs fell below ten million in February for the first time in nearly two years, a sign that the Federal Reserve's efforts to slow the labor market are starting to have an effect. The US Labor Department's JOLTS report showed a decline in job openings to 9.93 million."
Fear of inflation and economic slowdown
"The interest rate hike initiated by the Fed in May 2022 has now been indicated to stop because inflation in the US had reached 41-year high levels and the Fed's main target was the labor market to control it. The Fed has increased interest rates nine times in the last year, which has not had any significant effect on the labor market so far. However, due to the increase in the interest rate, the possibility of an economic recession has increased in the USA and Europe, the effect of which is visible in the economic data of the USA," Nirpendra Yadav said.
Gold price outlook
Expecting bull trend to continue in bullion market, Nirpendra Yadav of Swastika Investmart said, "Due to the increasing pressure on the labor market, it is becoming more likely that the Fed will not increase interest rates further, causing the precious metals to remain bullish."
Advising bottom fishing on every dip in gold prices, Sugandha Sachdeva said, "Decoding the price set up, the level of $1980 and then $1945 per ounce align as a key support area, while at the domestic markets, ₹59700 per 10 gm and ₹58500 per 10 gm are the cushion levels. On the higher side, prices are likely to navigate towards $2050 per ounce initially and a move towards its all-time high of $2075 per ounce mark looks also likely on the cards in the near term, which correspond to levels of around ₹61700 per 10 gm and then Rs.62500per 10gm at the domestic markets."
Triggers for gold price
On factors that may dictate gold prices in near term, Nirpendra Yadav said, "In upcoming week week, data from the IMF meeting, US CPI, FOMC meeting minutes, retail sales, and consumer sentiment will influence the movement of precious metals."
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.