Gold outlook: Fed commentary on rate hike to keep bullion on edge this week
0 4 mins 3 weeks

After a turbulent February, bullion has started March on a positive note. Gold recovered over 2 per cent over the week in the international market while gaining 0.54 per cent on the MCX. As trading resumes this week, gold and silver prices are likely to take cues from a host of important events.

The Street will be watching what Federal Reserve Chair Jerome Powell says on Wednesday, 8 March 2023 when he testifies on the US central bank’s semiannual monetary policy report, submitted to the Senate Banking Committee. Also, the two-day Monetary Policy Meeting of the Bank of Japan begins on 9 March, Thursday.

A resilient US job market could force the Fed to remain hawkish and increase interest rates further, later this month. In turn, this could strengthen the dollar and take sheen away from the precious metals. Movement in Dollar and gold price is inversely related.

India’s MCX will remain shut for trading on 7 March on account of ‘Holi’ in the 1st session between 9 am and 5 pm. Trading will resume in the next session between 5 pm and 11:30 pm.

A softer dollar and further resumption of Chinese economic activity led to some recovery in the prices of gold and silver in the week gone by.

Correction in the dollar index from resistance levels was one of the major reasons for the recovery in gold and silver, currency and commodity expert Anuj Gupta said. Bullion is also taking positive cues from stronger than expected business activity in China which is the largest commodity importer in the world, Gupta said.

April Gold Futures
Gupta, who is Vice President (VP), Commodity and Currency Research at IIFL Securities remains optimistic on the prospects of bullion over the next week. He recommends a buy on MCX April Gold futures at Rs 55,300 with a stop loss of Rs 55,000 and targets of Rs 56,000 and Rs 56,200.

Over the week, April yellow metal futures will find support at Rs 55,300 with next support at Rs 55,000. The resistance will be between Rs 56,200 and Rs 56,700.

On Friday, Gold futures ended flat at Rs 55,700.

Off their lifetime high of Rs 58,847 per 10 gram, Gold futures are still 1.50 per cent up on the year-to-date basis.

May Silver Futures

Meanwhile, May Silver futures finished at Rs 64,413 per kg, higher by Rs 379 or 0.59 per cent from the previous closing on Thursday. The IIFL Securities expert recommends a buy on silver futures at Rs 63, 000 with a stop loss of Rs 61,500 and target of Rs 66,000.

May Silver futures will find support at Rs 63,000-61,500 levels while resistance between Rs 66,000 and 67,500 levels.

Silver futures have dropped nearly six per cent on the YTD basis, Gupta said. They are trading at a discount of 21 per cent from their lifetime high of Rs 77,949 which it hit on 02 August 2020.

Meanwhile, analyst Nirpendra Yadav, Senior Commodity Research Analyst at Swastika Investmart Ltd takes a contrarian view and sees selling pressure in precious metals next week.

He puts support in gold at Rs 55,000 and resistance at Rs 57,000. As for silver, support is near Rs 61,500 and resistance is near Rs 67,400, he said.

Citing data from the World Gold Council, Yadav said that the purchase by major central banks picked up in January after moving south in December.

Uncertainties in the global economy, however, looms due to fear of further interest rate hikes which is engineering volatility in the prices of gold and silver, he adds.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *