On account of US Fed's rate hike buzz, gold price retraced more than ₹1,400 from its life-time high of ₹61,371 per 10 gm on Multi Commodity Exchange (MCX). Gold future contract for June 2023 on MCX finished at ₹59,945 levels on Friday. In international market, the precious yellow metal ended at $1,989 per ounce levels after flirting with psychological $2,000 level ahead of the weekend sessions. However, the stupendous rally in precious metal continued for the second consecutive month where prices gained around 0.50 per cent.
According to commodity market experts, gold price today has support placed at $1,975 and $1,950 levels whereas it is facing hurdle at $2,010 and $2,030 levels. On MCX, gold price today has support placed at ₹59,500 and ₹58,700 per 10 gm levels whereas it is facing resistance at ₹60,500 and ₹61,200 per 10 gm levels. They said that higher than expected US inflation and labour data has put pressure on the US Federal Reserve to raise interest rate and market is buzzing with speculation that US Fed may declare 25 bps interest rate hike in upcoming FOMC meting. However, they maintained that US dollar rate will continue to dictate gold prices and advised investors to maintain 'buy on dips' strategy as $1,960 to $1,950 is looking good supply zone for fresh long positions.
US Fed rate hike buzz
Speaking on the reasons that led to fall in gold prices across world, Nirpendra Yadav, Senior Commodity Research Analyst at Swastika Investmart said, "Gold prices have been under pressure for the past three weeks as US inflation remained higher than expected and there was a decline in unemployment claims data, which has raised hopes of another interest rate hike at the upcoming Fed meeting scheduled for May 2–3 this week. a fresh bet on an interest rate hike after the banking turmoil in the USA, putting pressure on precious metals prices."
However, Nripendra Yadav maintained that fears of an economic slowdown due to the ongoing insurgency in Sudan, pressure in the global economy due to high-interest rates and high inflation, contracting GDP, and weak manufacturing PMIs limited the losses in the precious metal. US personal consumption expenditure recorded a better-than-expected reading, and an unexpected drop in jobless claims kept gold prices marginally lower.
"The US Fed has already signaled that it is willing to risk a mild recession to curb high inflation. The central bank is widely expected to hike interest rates by 25 basis points at this week's meeting, and markets will be closely watching for further signals on monetary policy," Yadav said.
US dollar in focus
On other than US Fed rate hike factor that pulled down gold prices, market expert Sugandha Sachdeva said, "Retreat in the dollar index from multi-month lows and a revival in “risk on" sentiments have weighed on the asset largely viewed as a safe haven. The latest data indicated persistent price pressures in the US as the reading of personal consumption expenditure prices was higher than expected during the first quarter of 2023, raising concerns that Fed may not be ready to pause its most aggressive rate hike cycle in 40 years. The precious metal will likely witness significant volatility around the key event and take further cues from signals about the future monetary policy path."
Gold price outlook
On major levels in regard to gold rates today, Anuj Gupta, Vice President — Research at IIFL Securities said, "Overall bias for gold is still bullish and gold investors are advised to maintain buy on dips strategy in current correction. Gold rate today has immediate support placed at $1,975 whereas major support for the yellow metal is placed at 1,950 per ounce levels. I believe that US dollar would continue to dictate gold price movement and Dollar Index is not going to sustain long above 100 levels. It may come to the tune of 98 odd levels by end of current quarter."
"Once the gold price comes out of the base building mode, we can expect gold prices to hit $2,010 and $2,030 levels in international spot market soon. On MCX, ₹60,500 and ₹61,200 should be the target for those who mulling to indulge in bottom fishing," said Anuj Gupta of IIFL Securities adding, "For bottom fishing ₹58,700 to ₹59,000 would be a good supply zone for bottom fishing."
On supply zone for bottom fishing in international market, Amit Sajeja, Vice President — Research at Motilal Oswal said, "Gold price has a good supply zone of $1,960 to $1,950 and one can do the bottom fishing in this zone maintaining stop loss around $1,930 per ounce levels."
This article taken by livemint.com
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