Gold price today: Spot gold prices hit a six-week low of $1,680 an ounce, despite sharp rhetoric from various US Fed officials. Gold futures contract for the month of October 2022 expires at 165 high On Friday, at 50,521 per 10 grams, it ended its three-week run. In the spot market, the precious bullion metal ended the weekend session higher by 0.45 per cent at 1,716 levels. The reason for this rise in gold rates can mainly be attributed to the reduction in the dollar index after the European Central Bank (ECB) raised interest rates by a surprise 75 bps. After hitting a 20-year high of 110.78, the dollar index finally closed at 108.945 on Friday.
According to commodity market experts, spot gold rate Expected to trade in the range of $1,680 to $1,755 per ounce while MCX Gold rate may remain volatile from 49,800 51,200 per 10 gram range in near term perspective. However, he added that the ECB has hiked interest rates by 75 bps, which in the short term will halt the rally in the dollar index and hence traders should avoid taking short positions in the precious metal and till gold rates remain ‘dips’. But the strategy of ‘buying’ should be maintained. The range offered in the domestic and international markets.
Reasons for the rise in gold prices
Sugandha Sachdeva, Vice President, Commodity and Currency Research, Religare Broking, said on the rally in gold prices this week, “Gold has declined for three weeks and is back near the long support of $1680 an ounce. Despite scathing rhetoric from various Fed officials, Mark. The Fed Chair in her recent address at the Cato Institute’s annual monetary conference cemented hopes of another super-size rate hike at the Fed’s September meeting, overcoming runaway inflation. The stellar rally halted after the dollar index tested a two-decade high of 110.78 points, and it ended the week with a cut of nearly 0.63%. Taking their benchmark deposits, raised interest rates by a record 75bps to 0.75% in an effort to maintain price stability, even as they are facing the worst energy crisis in many years.”
The Religare analyst further said that Russia has stopped the flow of natural gas to Europe through the Nord Stream 1 pipeline, to create economic pain in the region. Bank of Canada also opted for a 75 bps rate hike in its recent meeting, indicating more rate hikes. These large rate hikes by other central banks suppressed the dollar index and prompted inflows into the gold security. Crude oil prices also saw a slide towards a 7-month low on bearish concerns and more Covid-19 restrictions in China. However, they reclaimed some lost ground at the end of the week as OPEC and allies agreed to reduce October output by 100,000 bpd to push up prices and after the Russian president threatened to halt energy exports to Europe. between, if price caps are imposed. , This could lead to some cooling in inflation in the near-term and prompt the Fed to slow the pace of rate hikes in the fourth quarter of the year, which will push gold prices lower.
“The ECB was expected to turn interest rates positive with a 50-basis points increase for the first time in 11 years, but it surprised everyone with an aggressive 75-basis points increase. Following the announcement of higher rates from the ECB With the euro corrected, it lost some of its base against the USD, leading to a minor relief rally in gold,” said Pritam Patnaik, Head of Commodities, HNI and NRI Acquisitions at Axis Securities.
Gold Price Outlook
With regard to gold price in domestic and international markets, Amit Sajeja, Vice President – Research at Motilal Oswal said, “Spot gold price has strong support at $1,680 an ounce level, while its immediate hurdle is $1,755. per ounce level Gold prices on MCX have immediate support 49,800 per 10 gram level while it is facing immediate hurdle 51,200 per 10 g level.”
Motilal Oswal expert said surprise interest rate hikes by various central banks including ECB is expected to keep dollar index under pressure in near future which means overall outlook for gold is positive. Hence, the ‘bargainers’ should continue buying on the dips strategy and avoid taking short positions till the gold rates in the domestic and international markets are in the above mentioned ranges.
Responding to the suggestion of positional gold investors, Sugandha Sachdeva of Religare Broking said, “Buying can be done when there is a fall in gold in the domestic market. from 49,200 49,400 per 10 gram area for higher levels around from 51,200 51,700 per 10 grams from a near term perspective. Precious metal has a strong cushion area 48,800 per 10 grams and prices seem to be respecting this level on a closing basis.”
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
catch all commodity news And updates on Live Mint. download mint news app To get daily market updates & Live business News,