Gold prices fall over ₹3400 from record high on stronger US dollar, hawkish Fed

According to commodity market According to experts, gold has surpassed its earlier support near $1,820 level and now its immediate support is placed near $1,785 to $1,780 levels in the international spot market. in the domestic market, 55,500 support has been broken and is now placed on immediate support for the precious bullion metal Rs 54,500 per 10 grams while Rs 52,700 for the precious yellow metal is expected to remain a strong cushion zone. He said that the dollar index has climbed to a peak of 105 and in a fortnight it has moved from below 103 to above 105. US Federal Reserve, Experts also said that gold prices are falling as higher borrowing costs from the US Central Bank have increased the opportunity cost of bullion investment.

US dollar drags gold prices

Nirpendra Yadav, Senior Commodity Research Analyst on why gold prices are falling worldwide Swastik Investmart said, “Precious metals declined last week as the Fed’s meeting minutes kept its stance tight on monetary policy. Now, investors are looking for more signals on monetary policy from economic data. Minutes show most members of its monetary policy committee favor raising interest rates this year as inflation remains more stable for a more extended period than expected.”

Speaking on the reasons for the fall in gold price, market expert Sugandha Sachdeva said, “Gold being a non-interest-yielding asset, higher interest rates increase the opportunity cost of holding gold and reduce its Investment appeal. In terms of key economic data, US Q4 2022 GDP was revised down to show an annual gain of 2.7 percent, slightly lower than an initial estimate of 2.9 percent, while the Fed’s favorite inflation metric—the core personal consumption index—increased at the highest pace in six months. , Beating expectations.”

“Core inflation accelerated to 0.6 percent in January, pushing the annual reading to 4.7 percent in January compared to expectations of 4.3 percent, adding further strength to the dollar index. Investors are preferring the safety of the dollar. Gold in terms of greenback has been going higher since last four weeks,” Sugandha said.

gold price outlook

When asked about gold price outlook, Sugandha Sachdeva said, “Gold prices are witnessing a corrective rally so far and look vulnerable to further downside. There may be intermittent bounce, but The bearish trend seems to be skewed in the near term. In the international markets, the prices have broken the crucial support near $1,820 per oz and looks prime to target the $1785-1780 per oz zone. Similarly, the precious metal recovered support is broken. 55,500 per 10 grams in the domestic markets and seems to be on its way to the level of 54,500 per 10 grams in the near term and eventually 52,700 per 10 grams from a medium term perspective, which is a strong cushion area for the prices. remains at resistance this week 56,000 per 10 gram mark.

Russia-Ukraine news in focus

However, Sugandha Sachdeva said that geopolitical tensions around Russia will however remain on the radar of market participants and may impact gold prices.

Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint. We advise investors to do due diligence with certified experts before making any investment decision.