Gold price today: After giving a break to $1935 per ounce in the spot market last week, the price of gold failed to hold onto that edge. After hitting levels around $1852, the price of the yellow metal fell back below the $1800 levels. On Friday, precious bullion closed around $1,791 per ounce in the international market, while the MCX gold rate for the February futures contract ended at 47,678 per 10g, ₹232, around 0.50% lower than its Thursday close.
According to commodity market experts, the drop in the price of gold last week was mainly due to the US Fed’s hawkish stance on raising interest rates. However, they argued that the crashing stock market, the overbought dollar index, the depreciation of the Indian National Rupee (INR) against the US dollar (USD) and the expected rise in the price of crude oil due to the Russian-Ukrainian conflict are some of the main triggers that could fuel the rally in the price of gold in the short term.
International triggers for the price of gold
Speaking on the international triggers that could support the rise in the price of gold in the short term; Anuj Gupta, Vice President of Commodities and Currency Trading at IIFL Securities, said: “Gold prices have recently corrected sharply after the Fed’s hawkish stance on higher interest rates. However, global inflation remains a major concern as the ongoing conflict between Russia and Ukraine could fuel crude oil. again the prices in the international market and if this conflict lasts a little longer, the prices of Brent crude oil could rise up to 120 dollars per barrel, which could further worsen the scenario of global inflation leading to a rise in the price gold. »
Echoing the views of Anuj Gupta; Amit Sajeja, vice president of commodities research at Motilal Oswal, said: “Global inflation will persist even when the Russia-Ukraine conflict ends earlier than expected. Average inflation in the United States is expected to remain around 4.5% to 5%, which is much higher than the target figure of 2%. The dollar index has also appreciated to an overbought condition and it may fall at any time, causing the price of gold to rise in the spot market.
INR vs USD: How Rupee Drop May Affect Gold Price
Speaking on the domestic trigger likely to fuel MCX gold rates, Amit Sajeja of Motilal Oswal said: “The Rupee has depreciated against the US Dollar over the past fortnight. It has fallen from 74 levels to ₹75.3 per US Dollar level and it is expected to continue lower to 76 levels. Thus, MCX gold prices are also expected to rise due to the decline of the Indian Rupee against the US Dollar. Thus, the MCX gold rate can be expected to move north even when the spot gold price remains stable.”
On the impact of the falling rupiah on the price of gold in the domestic market, Anuj Gupta of IIFL Securities said: “The fall of Re 1 against the US dollar leads to an increase in the price of gold in the domestic market of approximately ₹250 to ₹300 for 10g. Over the past fortnight, we have witnessed approximately ₹The 1.3 drop against the US Dollar fell from 74 to around 75.3 levels. So around ₹The rise in the price of gold to 500 for 10g has been contained by the Fed’s recent hawkish stance on key rates, but a further drop in INR against the USD could trigger a further rise in the price of gold up close ₹500 per 10 g in the domestic market.”
Gold Price Outlook
Expecting the domestic gold price to follow the spot market, Amit Sajeja said: “Spot gold price still has strong support at 1760 for once and it is trading now in a wider range from 1760 to 1865. However, this time the rise in the price of gold will not be a directional and sharp, so one should continue to book partial profit and upgrade the trailing stop loss to every breakout. Expected immediate breakout of spot gold price is $1805 followed by levels of 1865 per ounce, so it is advisable to upgrade the trailing stop loss to $1780 after a breakout at 1805 levels $ while they can further improve their trailing stop loss to levels of $1830 once there is a breakout at $1865 per ounce at the close. The price of gold in the spot market can reach 1900 $ per ounce after giving a break to $1865 levels.”
Advising the buy on dips strategy for gold investors in the domestic market, Anuj Gupta said: “The MCX gold rate is enjoying strong support at 47,100 levels. buy gold in ₹47,500 to ₹Range of 47,600 at MCX for an immediate objective of ₹47,900 in 10g levels. However, one can hold the February MCX Gold futures contract for a short-term target of ₹48,300 hold stop loss at ₹47,100 levels.” Anuj Gupta of IIFL Securities added that the price of MCX gold could go up to ₹48,500 and ₹48,700 immediately after breaking ₹48,300 hurdles.
Warning: The opinions and recommendations made above are those of individual analysts or brokerage firms, and not of Mint.
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