The gold and silver prices may see some correction towards Rs 1,41,000 per 10 gm levels and Rs 2.20 lakh per kg levels, respectively, if the US Federal Reserve goes for interest rate hike by mid-September.
The US Federal Reserve is meeting on September 15. The case for 0.25 per cent rate hike has become stronger after the recent jobs data. If inflation numbers show a spike this Friday, the Fed will possibly go for a rate hike this September, said Ajay Kedia, MD, Kedia Commodities. “Much depends on the inflation data. Till now the concerns about the health of the economy were holding back the Fed. After strong job data, the Fed can look at taming the inflation,” he said.
This would be negative for precious metals – gold and silver. In the anticipation of rate hike, gold prices slid below $4400 per ounce on Monday and silver closer to $65.50 per ounce.
“If the Fed hikes the interest rate, we would see gold prices coming down to $4150 per ounce. Silver could slide to $58 levels. In the domestic market, gold prices can drop to Rs 1,41,000 levels from the current Rs 1,52,000 levels and silver from Rs 2.50 lakh per kg to Rs 2.20 lakh. The rupee appreciation in the past 15 to 20 days has undervalued gold and silver,” said Kedia.
These levels could be good buying opportunities for investors. The festive season demand usually supports gold and silver, and prices are likely to move up after the correction.
Kedia finds gold prices to move up to $5000 and silver $90 by year-end.