Home / Markets / Commodities /  Gold price retraces from record high. Right time to accumulate?

Gold rate today: On account of weak US treasury weighing on dollar index and US Fed softening stand on interest rate hike, gold price on Multi Commodity Exchange (MCX) climbed to a new high of 57,150 per 10 gm in the week gone by. However, profit booking soon triggered and it finally ended at 56,875 levels on Friday, logging weekly gain of 0.35 per cent in domestic market. In international market, spot gold price finished at 9-month high of $1,927 per ounce.

According to commodity market experts, gold rates are expected to remain volatile and witness some more correction as investors are eyeing at the first US Fed meeting of 2023 and India's Union Budget. These two factors are expected to dictate gold prices in international and domestic markets respectively. The precious yellow metal is facing hurdle at 1950 levels in spot market whereas in domestic market, the immediate hurdle for gold price is placed at 57,200 per 10 gm levels. On downside, immediate support for the yellow metal is placed at $1,920 per ounce levels whereas on MCX, immediate support for precious bullion metal is placed at 56,200 per 10 gm levels.

What's fueling gold price rally

On reasons that fueled gold price rally, Nirpendra Yadav, Senior Commodity Research Analyst at Swastika Investmart said, "The benchmark US Treasury yield remained under pressure, which in turn weighed on the US dollar and touched the 101 level last week. In fact, gold prices gained momentum on haven demand and growing expectations that the Federal Reserve will slow the pace of interest rate hikes in the coming months. These investor expectations have led to a fall in the dollar and US Treasury yields, and precious metals have benefited from this."

On why market is expecting US Fed to soften stand on interest rate hike, market expert Sugandha Sachdeva said, "The latest data showed that the US economy grew more than anticipated in the fourth quarter, fuelling renewed bets on the safety of the dollar. The US GDP rose at a 2.9 per cent annualized pace in the final quarter of 2022, slightly better than expectations despite the lingering concerns about a slowdown hitting the economy in the year ahead. Furthermore, the inflation in the US eased in December on an annual basis, compared to the previous month as per the Fed's preferred inflation measure-core PCE price index. This sparked optimism that price pressures are well past their peak and the Fed will adopt a less aggressive policy stance going forward."

Budget 2023, US Fed meeting in focus

Expecting volatility in gold rates in near term, Sugandha Sachdeva said, "The next week is going to witness volatile swings in gold prices as investors are eyeing the first policy meeting of the US central bank for the year. The expectations are for a quarter of a percentage point rate hike, but further signals about the US Fed’s monetary policy stance shall be the key variable, dictating the trajectory of gold. Besides, the Union Budget could lead to significant movement in the exchange rate that will also have a bearing on domestic gold prices. With a focus on both these events, the expectations are for some corrective moves setting in gold prices."

Key levels to know

Unveiling pivot levels in regard to precious bullion metal price, Anuj Gupta, Vice President — Research at IIFL Securities said, "Immediate hurdle for gold price in the international market is placed at $1,950 per ounce levels whereas it is facing strong hurdle at $ 1,985 levels. In domestic market, MCX gold rates have immediate hurdle placed at 57,200 per 10 gm levels whereas it next major hurdle is at 57,500 per 10 gm levels. On downside, immediate support for gold in international market is at $1,920 whereas in domestic market, it has immediate support placed at 56,200 levels."

Advising buy on dips strategy for long term gold investors, Sugandha Sachdeva said, "Gold prices are portraying an overbought scenario and a healthy correction will let bargain buying trickle in yet again and help the metal ascend into a higher orbit from a long-term perspective.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

Asit Manohar
Chief Content Producer at Live Mint Digital Team
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