After a two-week rally, gold saw a decline as prices moved closer to the psychological barrier of $2000 an ounce at the start of the week. Yellow metal futures contract for June 2022 . ended on 52,264 per 10 grams on the Multi Commodity Exchange (MCX), approx. 3500 less than its all-time high 56,191 levels. Spot gold closed at the level of $ 1929 an ounce.
According to commodity market experts, the skeptical bulls retreated, leading to the termination of long trades, which were dragged to the downside. gold prices To a two-week low. He said the fall in gold prices was due to a rise in US Treasury yields and the US Fed’s push to hike interest rates. However, the dollar index hit a record high of 101, which spoiled the bulls’ party. But, he added that concerns over the Russo-Ukraine war and global inflation will continue to support gold demand and the overall outlook for gold is still positive. He added that $1870 level is still a strong support for gold price and MCX gold rate may rise soon 53,500 as the market has already given a lot of leeway on reasons to put an end to the gold rush.
Speaking on the reason for the fall in the price of gold last week; Sugandha Sachdeva, Vice President of Commodity and Currency Research at Religare Broking Ltd., said, “The fall in gold was a response to the rising US 10-year Treasury yield in a deeply emphatic voice of the Fed Chair. Speaking at the IMF event, she hinted further. Given that the rate hike of 50bsp is meant to curb further inflation going forward, the rising dollar index spoiled the party for the metal bulls as it climbed to a two-year high of 101 points An upward trend did not bode well for gold with the Fed’s harsh tone on US Treasury yields and the greenback as well as tighter policy.Moreover, soft energy prices eased some inflationary concerns and weighed on gold Because oil remained muted last week, while gas prices fell after hitting multi-year highs in the first week.”
However, he added that the outlook for gold is still positive as geopolitical tensions and global inflation will continue to decide the price of gold in the short term.
“On the geopolitical front, there is still no sign of a ceasefire, even as the Russo-Ukraine War is entering its third month. As the Ukraine crisis worsens, there is a growing sense of panic that it will This will further disrupt supply chains and add to already hot inflation, while also leading to a “risk-off” impulse. This will give gold its status as a safe haven as well as a hedge against inflation. Besides, lower prices are also likely to attract stronger physical demand from India amid the ongoing wedding season, which will further bring down prices,” said Sugandha Sachdeva.
Religare Broking resonates with Sugandha Sachdeva; Anuj Gupta, Vice President – IIFL Securities said, “There has been a significant discount in gold price in the spot market due to reasons like rising dollar index, US bond treasury yield etc. But, due to reasons like Russia-Ukraine war, inflation, IMF trimming etc. Economic forecast and the beginning of the wedding season in India is expected to provide strong support to the precious yellow metal in the short to medium term.Spot gold still has strong support at the levels of $1850 to $1870 per ounce and $1890 level. to $1900 can still be considered as a strong demand zone for the precious metal.”
Anuj Gupta further said that there is strong support for gold prices on MCX 52,000 more 51,400 levels. no dip down 52,000 should be seen as a buying opportunity from 51,600 51,800 can be a good accumulation zone for gold investors.
Speaking on the gold price outlook, Sugandha Sachdeva of Religare Broking said, “Gold prices are likely to maintain a positive bias. 51,000 per 10 grams ($1890-$1870 per ounce) will be a key near term base to support the price. On the other hand, the psychological $2000 mark is likely to remain a major hurdle in the coming sessions, which will be 53,500 per 10 gram mark in the domestic stock exchanges. As of now, we see prices hovering within a range, unless there is a solid breach on either side.”
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.