After two weeks of rally, gold prices saw a decline as the price moved closer to the psychological barrier of $2000 an ounce at the beginning of last week. Skeptical bulls retreated, ending long trades that dragged prices to two-week lows. On the Multi Commodity Exchange (MCX), the gold price futures contract for the end of June expired at 52,264 per 10 grams, while spot gold ended last week at $ 1929 per ounce. According to commodity market experts, the outlook for gold price is still positive and any downside should be viewed as a buying opportunity by the precious metal investors.
speaking on key triggers that can direct gold price in short term; Sugandha Sachdeva, Vice President, Commodity and Currency Research at Religare Broking Ltd., said, “At the start of the week, the first major French presidential election will result in the second round, which will be closely watched by market participants. Timing. The direction of inflation and in turn the movement of energy prices for gold will also be on investors’ radar. New developments related to the situation in China and the crisis in Ukraine will determine the direction of the dollar index and Treasury yields going forward Also, the US first quarter GDP report will provide insight into the health of the economy.”
Here we list down the top 5 triggers that can decide the price of gold in the short term:
1]Dollar Index: This will be the major factor which can decide the price of gold in the short term. “The dollar index has risen to the level of 101 and is considered to be in overbought position. Any fall in the dollar index will lead to a rise in gold prices and hence gold investors are advised to keep a close watch on the index, Anuj Gupta, Vice President – Research at IIFL Securities.
2]US GDP Data: The US Gross Domestic Product (GDP) release date is 28 April 2022 i.e. next week. “If the US GDP data is disappointing, in that case, the US Fed’s harsh stance on interest rate hikes could be discounted and inflation could become a major concern for the US economy. In such a scenario, the demand for the haven asset would be the answer. This may lead to an increase in the price of gold across the world,” said Anuj Gupta.
3]French Presidential Elections: The current French president is considered pro-American. In the case of a change in leadership, there may be some negative impact on the geopolitical system, especially when the Russo-Ukraine War is going on. The French election results are significant because a leadership change would mean an immediate increase in gold demand in the short term.
4]Russo-Ukraine War: This geopolitical tension is still not over and crude oil prices are still above the level of $100 a barrel. Therefore, any Ukraine news from Russia is expected to act as a major trigger for gold in the near 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 the already hot inflation, while also leading to a “risk-off” impulse. Will get benefit for the rescue.”
5]Growing Demand in Indian Domestic Market: Due to the ongoing wedding season, the demand for physical gold is expected to remain high for the next two months, which may hamper the demand supply. Hence, the rise in demand for gold is an important domestic trigger that gold investors cannot afford to miss.
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.