Gold prices have risen after the fall in the dollar index. Should you join this rally?

According to commodity market experts, following the US Fed’s tough stance on interest rate hikes, most of the world’s central banks have become hard on interest rates as they are concerned about their national economy following the ‘immoral hike’. dollar index leading to a fall in its respective currencies.’ Hence, they are expected to raise interest rates soon and RBI’s decision to raise the repo rate should be viewed from this angle. He said gold rates are in an ‘uptrend’ today and the trend is expected to continue in the upcoming festive season in the domestic and international markets. He said that the spot gold price may go up to $1,710 while the MCX gold price may go up. 52,500 till this Diwali.

Retreat in Dollar Index

Sugandha Sachdeva, Vice President, Commodity & Currency Research, Religare Broking, while speaking on the reason for the rise in gold prices said, “Gold prices have been highly volatile last week but domestically gold with a gain of 1.61 per cent. The precious metal maintained its inverse relationship with the dollar index, where it initially rose to a new two-decade high of 114.77, but then ended with a loss of around 0.71 per cent. The US Fed’s tight cycle and uber-hawkish stance compared to other major central banks have been key factors supporting the dollar this year.”

However, the Religare expert said that the dollar is moving towards the safety of gold as the US dollar retreated from the recent highs. Moreover, the risks of a global economic slowdown also fueled the buying interest in the precious metal. He further said that the Indian rupee was devaluing towards a record low of 82 points which provided a cushion to the highly volatile gold prices last week.

Gold Price Till Diwali – Here’s What Experts Say

On the gold price outlook, Anuj Gupta, Vice President – IIFL Securities said, “The overall gold price outlook is positive as central banks across the world have expressed concerns about their respective economies, as recently There has been an unethical rise in the dollar index, leading to a fall in their respective currencies. Therefore, interest rates are expected to rise from central banks across the world and the repo rate hike by the Indian central bank should be viewed from this aspect. Doing that the dollar index will break its current support of 110 and it may go up to 108 levels by Diwali 2022.” He advised short term investors to buy gold and hold it till Diwali.

Sugandha Sachdeva of Religare Broking said risks of a global economic slowdown also favor buying in this precious metal. It said gold rates have managed to stay above key support 48,800 per 10 grams mark in the domestic markets despite a significant fall in the international markets for the last six months.

“Going forward, the said support remains a sacred mark and we may continue to continue buying interest in the coming days. Towards any downside 49,500 per 10 g zone will be a good opportunity to accumulate metal for the near term target 50,700 per 10 gram mark,” said Sugandha Sachdeva.

Echoing Religare analyst views, IIFL’s Anuj Gupta said, “Immediate support for spot gold price is placed at $1,610, while it is expected to move towards $1,710 an ounce level by this Diwali. On MCX, Gold rates are expected to go up. 51,300 per 10 grams while it is expected to go up in the near term 52,500 per 10 grams till this Diwali festival.” He added that those who are short term can make profits at around $1,695 an ounce level in the spot market, he added. 51,300 level on MCX.

Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.