Gold prices likely to remain under pressure in the near term: Buy or wait?

According to Jatin Gohil, Technical & Derivatives Analyst, Reliance Securities, MCX Gold April futures saw a strong rally, after which it got stuck in a broad range of consolidation, where it could take strong support near the rupee. 55,600 and the higher side hurdle is near Rs. 56,000 points. This continues in the evening session until support or resistance is broken with strong candles and volume.

Globally, gold prices declined as speculators awaited US Federal Reserve Chairman Jerome Powell’s speech this week to signal a future rate hike. Gold fell 1.4% to $1,821.99 an ounce as the central bank fueled jittery expectations of higher interest rates. Gold futures fell 1.6% to $1,826.10 an ounce.

According to Kunal Shah, Head of Commodities Research, Nirmal Bang Commodities Pvt Ltd, with the US economy growing strongly, leading indicators such as retail sales, PCE index, new home sales, all continue to point towards a tightening that may take another 1-2 months. 25 bps on cards and 2-3 hikes of 50 bps-25 bps in Europe. So gold prices may remain under pressure in the near term but for the past 6 months central banks have remained major buyers of gold for diversification than investors.

Kunal Shah said, “The reason gold is now a strategic investment is because the balance sheets of central banks have grown rapidly due to heavy printing at the time of the pandemic and now the balance sheet deficit brings the central bank into uncharted territory as the financial Never happened in history. There have been such monetary experiments in the market, so no one knows what will happen, as well as cold war-like scenarios around the world. Military budgets of major economies are expanding, here today Even Beijing said military budget – about $225 billion about 14% of the total budget, US budget on the other hand is four times that of China so the downside and time period of gold reform may be small and short term its upside 1-3 months before the journey begins. We remain very bullish on gold over a two-year horizon and $2200 remains our target.”

Colin Shah, MD, Cama Jewellery, said, “Gold prices have been under pressure due to monetary policy tightening by major global central banks. Statistically, gold prices have gained almost 2% YTD, 6.6% in the last year, despite the fall. In fact, gold prices posted double-digit returns in 2022 where the benchmark Nifty was up around 4-4.5%.

“Rise in rates makes gold less attractive as an investment class. A rise in rates globally tends to push the USD up, making it costlier to buy gold. Gold prices are likely to come under some pressure as central banks have hinted at further rate hikes in the rest of 2023. However, rise in geo-political tensions and slowdown in global economy will further support the upside in gold prices,” added Colin Shah.

Rajesh Rokde Vice Chairman – All India Gem & Jewelery Domestic Council (GJC) said, “As we know history shows in near future, as of today gold is still showing bullish momentum and gold price is going to rise every day. Good opportunity to buy gold by deep MCX or . Fiscal, gold market should also be closely monitored as we are approaching March end.”

On Monday, the rupee strengthened by 5 paise to close at 81.92 against the US dollar. The dollar index, which measures the US dollar’s strength against a bundle of six currencies, climbed 0.6% to 104.58.