Gold rate today: On account of the higher-than-expected US CPI data, gold price in the international market touched a two-month low of around $1,992 per ounce level. However, the yellow metal witnessed some value buying in the international market, which enabled the precious bullion metal to regain some of its lost ground in the last two weeks. However, this relief rally was not enough to pare the entire losses, and gold future contract on the multi Commodity Exchange (MCX) for April 2024 expiry ended lower for the second week in a row.
According to commodity market experts, gold prices came under pressure in the week gone by after the release of higher-than-expected US CPI data. This created a buzz in the market that the US Fed is not going to reduce interest rates in the near term as the inflation concern is still around.
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After this higher US Fed rate buzz, US dollar rates started rising and touched a three-month high. However, after the release of softer-than-expected US retail sales data, the US dollar rate retraced, which enabled some value buying in the yellow metal. Weak economic data from the UK and Japan also fueled bottom fishing in the precious bullion metals.
Why gold prices are under pressure?
Speaking on the reasons that have put gold prices under pressure, Anuj Gupta, Head — Commodity & Currency at HDFC Securities said, “Gold prices came under pressure and touched two-month low after the release of higher-than-expected US CPI data. This US CPI data fueled the speculation that the US Fed is not going to cut interest rates till June 2024 or in other words, the higher interest rates are going to stay till mid of 2024. This created a demand for the US dollar in the currency market, which helped the American currency to scale at a three-month high. However, after the release of softer-than-expected US retail sales data triggered profit-booking in the US dollar, which helped gold prices to rebound from their two-month lower levels.”
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On triggers that dictated gold price movement in recent sessions, Sugandha Sachdeva, Founder of WealthWave Insights said, “Gold prices exhibited some volatility during the week, initially sliding before recovering a portion of the losses, yet ultimately concluding lower for the second consecutive week. The precious metal witnessed a sharp sell-off after the release of US CPI figures wherein the inflation inched higher than expectations in January (MoM). On an annualized basis, the inflation rose by 3.1 percent as against expectations of a 2.9 percent rise. This has cemented expectations that rates are going to stay higher for longer in the US, prompting a surge in the dollar to three-month highs and consequently exerting downward pressure on bullion prices. However, amidst this backdrop, softer-than-expected retail sales data tempered the strength of the greenback, sparking renewed interest in gold.” She said that weak economic indicators from the UK and Japan contributed to increased demand for gold as a safe haven asset.
Gold, silver price outlook
On the outlook for gold and silver prices in the near term, Sugandha Sachdeva said, “Looking ahead, the outlook for precious metals remains positive, underpinned by lingering geopolitical tensions. Nevertheless, some profit-taking at elevated price levels can be seen. Gold price may encounter resistance around the ₹62,400 per 10 gm mark, while silver seems to face a hurdle near the ₹72,700 per kg level. For investors, opportunities may arise during price pullbacks. Dips in gold prices towards ₹61,200 per 10 gm could present favorable entry points for portfolio diversification, while declines in silver towards ₹71,000 per kg could attract renewed buying interest.”
Sugandha went on to add that the market participants are likely to focus on the release of the FOMC minutes from the last meeting, which could provide further insights into the Federal Reserve’s monetary policy stance and its potential implications for the precious metals market.
Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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