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Gold price today on MCX (Multi Commodity Exchange) surged more than 0.50 per cent despite Fed's bond tapering news. February future contract of the yellow metal at MCX opened with an upside gap and hit intraday high of 48,367 per 10 gm, appreciating to the tune of 302 per 10 gm against its yesterday's close of 48,065 per 10 gm mark. As per the commodity market experts, this rise in gold price today was expected as Fed's bond tapering announcement on yesterday night was much on the expected line of the markets. They said that there can more upside movement in the precious bullion metal but the rise will be limited in short-term time-horizon.

Reason for gold price rally

According to commodity market experts, gold price today witnessed sharp upside movement in early morning deals because even though the Fed has sounded hawkish it was largely on expected lines and market is expected to adjust to these monetary tightening measures in coming days. They said that immediate support for gold price in sport market at $1760 per ounce is holding well and it may go up to $1835 per ounce levels in coming fortnight to one month. In MCX terms, then said that gold price may go up to 49,300 to 49,500 per 10 gm after breaching its immediate hurdle of 48,700.

Highlighting upon the gold price dynamics Sugandha Sachdeva, Vice President-Commodity & Currency Research at Religare Broking Ltd said, "Gold prices have witnessed recovery even as the Fed has doubled the pace of bond tapering in their latest meeting and have opened the door for three rate hikes in the US in 2022 amid rising price pressures and improvement in the labour market. Even though the Fed has sounded hawkish but it was largely on expected lines and market is expected to adjust to these monetary tightening measures in coming days. Besides, markets are looking forward to other key central bank meetings- ECB, Bank of England and Bank of Japan for further clues about the monetary policy divergence between the key central banks. This will steer the path of dollar index and dictate the path of the precious metal. That said, any dip in gold prices in near-term should be construed as a good buying opportunity by gold investors."

Gold price outlook

Expecting more upside in gold price; Amit Sajeja, Vice President — Commodity Research at Motilal Oswal said, "Fed's tapering announcement yesterday night was on the expected lines and the market had already discounted gold price ahead of Fed meeting yesterday when gold price in the spot market touched $1753 per ounce low. But, there is sharp rebound in gold price today and it is expected to continue for next fortnight to one month. However, the rise in yellow metal in near term will be limit and it may trade in the range of $1760 to $1835 per ounce levels. So, I would suggest gold buyers to buy on dips and book profit keeping these upper and lower levels in mind."

Echoing with Amit Sajeja's views; Anuj Gupta, Vice President — Commodity & Currency Trade at IIFL Securities said, "For immediate short-term, one can buy gold at 48,200 levels on MCX for the immediate target of 48,500 per 10 gm. At MCX, gold is facing hurdle at 48,700 levels and after breaching this hurdle, the yellow metal price may go up to 49,300 to 49,500 per 10 gm in net fortnight to one month time. Short-term gold investors can maintain buy on dips keeping stop loss at 47,700 levels."

Heralding one of the most hawkish policy pivots in years, the US Fed said on Wednesday that it will double the pace at which it is scaling back purchases of Treasuries and mortgage-backed securities to $30 billion a month, putting it on track to conclude the program in early 2022, rather than mid-year as initially planned.

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

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