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Gold rates today in spot market has hit 2-year low of $1,661, breaching its strong support of $1,685 per ounce. Gold price today on Multi Commodity Exchange (MCX) is also down by 92 per 10 gm in early morning deals to 49,220 levels. 

According to commodity experts, yellow metal is under pressure after the buzz about 100 bps US Fed interest rate hike in next week meeting and dollar index appreciating to the tune of 110 again. They said that gold prices are expected to remain under pressure till the US Fed meeting is not over. They advised bullion traders to maintain 'sell on rise' strategy till spot gold price is below $1,710 per ounce range.

Gold price outlook

Speaking on the primary reason for gold price slump, Amit Sajeja, Vice President — Research at Motilal Oswal said, "Primary reason for fall in gold prices is market buzz about 100 bps US Fed interest rate hike after an unexpected US inflation data this week. The market was expecting ease in inflation data but instead the US inflation went up in August 2022. That has triggered speculation for near about 100 bps interest rate hike by the US central bank. Though, the probability for a 100 bps US Fed interest rate hike is only 44 per cent today, but the market has started discounting the possible interest rate hike by the US Federal Reserve in its meeting next week."

Echoing with Amit Sajeja's views, Anuj Gupta, Vice President — Research at IIFL Securities said, "Dollar Index has also ascended to near 110 levels, which is close to its 20-year high of 110.78. The index has taken support at 1408 levels and it may remain intact in near term as possibility of US Fed interest rate hike is quite high. Spot gold rates are expected to remain in $1,640 to $1,685 levels till the US Fed meeting is not over."

Strategy for gold traders

Unveiling strategy for gold traders in current scenario, Amit Sajeja of Motilal Oswal said, "There can be some pull-back rally in spot gold and MCX gold price, but it should be seen as a sell o rise opportunity by the bullion traders. They can sell gold at around $1,685 per ounce levels in spot market and on MCX, the selling range would be 49,700 per 10 gm levels." He said that spot gold traders should book profit around $1,650 levels whereas on MCX, the profit-booking range would be 48,700 to 48,800 per 10 gm levels."

On pivot range that one should keep in mind till US Fed meeting next week, Anuj Gupta of IIFL Securities said, "Small range of spot gold price is expected to remain in between $1,640 to $1,685 levels whereas broader range would for near term is expected to remain in $1,610 to $1,710 per ounce levels. On MCX, gold rates have immediate support placed at 48,800 and 48,300 per 10 gm levels whereas it is facing immediate hurdle at 49,700 and 50,200 levels. One should start selling from 49,700 levels maintaining stop loss above 50,200 and book profit at around 48,800 levels."

Gold rates in Indian domestic market continue to oscillate around 6-month lows as MCX futures fell 0.16 per cent to 49,220 per 10 gram. Silver futures dipped 0.4 per cent to 56,194 per kg in early morning deals. On Thursday, gold had tumbled 1.4 per cent while silver price slipped 1 per cent in Indian markets, following global sell-off in the bullion markets.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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