Gold rate today around ₹60K. Can the rally continue with FOMC meeting in focus?
3 min read 21 Mar 2023, 10:58 AM ISTGold prices are expected to follow US Fed's statement on bank crisis in US rather interest rates, believe market experts
PremiumGold rate today is around ₹60,000 per 10 gm and market experts believe that the yellow metal may continue to remain range-bound for entire session today as investors are skeptical about the outcome from the FOMC meeting that is going to begin today. Experts said that gold price in international market would remain range bound in between $1,950 to $2,010 per ounce levels whereas in domestic market, the precious bullion metal would oscillate in ₹58,700 to ₹60,500 per 10 gm levels. They said that focus is not on the US Fed rate hike but on the US Fed statement on the bank crisis in US. They advised gold investors to keep an eye on the Dollar Index, which is expected to dictate gold and other asset movement.
Bank crisis in US
Speaking on gold price outlook before FOMC meeting, Anuj Gupta, Vice President — Research at IIFL Securities said, "Gold rate today is expected to remain range-bound as investors are awaiting the outcome of FOMC meeting that is going to begin today. However, focus won't be on the US Fed rate hike but on the US Fed's statement on the bank crisis in US because investors across world are expecting rad map from the central bank of America to combat series of bank collapses in US."
Anuj Gupta went on to add that US Fed is expected to remain less hawkish and announce not more than 25 bps rate hike as inflation is more due to political reasons like Russia-Ukraine war than any economic reason. "I am expecting less hawkish stance from the US Fed chief Jerome Powell in this FOMC meeting today and some announcement of a concrete road map to bail out the crisi hit US banks, which include Silicon Valley Bank, Signature Bank, First Republic Bank, etc," Gupta said.
Pointing towards bank crisis in US, Navneet Damani, Senior VP – Commodity Research at Motilal Oswal Financial Services said, "Bets are solidified for a less aggressive Fed in its fight against inflation. The collapse of Silicon Valley Bank in the US has highlighted banks' vulnerabilities to sharply higher rates, while a rout in Credit Suisse shares has added to the market turmoil. On other hand, after ECB announced a 50 bps rate hike last week, all eyes are now on Fed's policy meeting scheduled from 21st to 22nd March 2023. The US Fed is expected to raise rates by 25 bps, however probability for a pause is increasing sharply supporting the move in safe haven assets. "
"Major central banks including Fed, ECB, BOJ, BOE announced a co-ordinated central bank action to enhance liquidity via USD-Swap line. These updates are likely to keep the volatility high. Broader trend on COMEX could be in the range of $1985 to $2015 and on domestic front prices could hover in the range of ₹59,800 – 60,600 could be expected," Navneet Damani added
Triggers for gold rate today
"Over the weekend, there were quite a updates regarding the US banking concerns which slightly weighed on the safe haven assets. UBS agreed to buy 167-year-old Credit Suisse for $3.23 billion and assume up to $5.4 billion in losses in a deal backed by a massive Swiss guarantee and expected to close by the end of 2023. Meanwhile, major central banks including Fed, ECB, BOJ, BOE announced a co-ordinated central bank action to enhance liquidity via USD-Swap line. These updates are likely to keep the volatility high," said Motilal Oswal expert.
On important levels to watch in regard to gold prices, Anuj Gupta of IIFL Securities said, “Gold price in international market is expected to remain in ₹58,700 to ₹60,500 per 10 gm range on MCX and in $1,920 to $2,010 per ounce in international spot market." He also said that Dollar Index is expected to remain in 100 to 106 levels. As gold prices are inversely following Dollar Index, breach of either side would be considered bullish or bearish trend for gold.
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.
