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Gold price on Friday regained the psychological 48,000 mark on Multi Commodity Exchange (MCX) and closed at 48,189 per 10 gm levels, 250 up from its Thursday close. According to commodity market experts, sharp rise in the US inflation where CPI soared to 6.80 per cent, was the major reason for this gold price rally in spot and domestic market. They said that US CPI has touched to the highest levels since 1982 and hence there can be some more upside expected in the yellow metal price. However, they maintained that hawkish tilt in Fed stance on interest rate hike may not allow precious bullion metal price to go beyond $1865 per ounce in spot market whereas 49,500 per 10 gm on MCX may work as upper hurdle in short-term.

According to commodity market experts, gold investors should maintain 'buy on dips' strategy till gold price is above $1760 per ounce in spot market and above 46,800 per 10 gm on MCX. They said that rupee depreciating against the US dollar is an additional reason for gold price rally in domestic market that includes MCX.

Speaking on the gold price triggers in short-term; Sugandha Sachdeva, Vice President — Commodity & Currency Research at Religare Broking Ltd said, "The major reason for rise in gold prices yesterday was the US CPI data touching 6.80 per cent though in line with estimates, but highest since 1982. The hot US inflation number has been the major catalyst for sudden upside in the yellow metal prices in spot and domestic market. Besides, Indian rupee depreciating against the US dollar and touching around 76 per dollar levels and concerns surrounding Omicron Covid variant and its impact on global growth are the key factors fueling gold prices in the domestic market."

Sugandha Sachdeva went on to add that overall sentiment for gold in spot and domestic market is positive and any dip in gold prices should be seen as a buying opportunity in the near-term.

Echoing with Sugandha Sachdeva's views; Anuj Gupta, Vice President — Commodity & Currency Trade at IIFL Securities said, "Gold has immediate support at $1760 per ounce in spot market whereas it has immediate hurdle at $1820. So, one should buy in the range of $1780 to $1790 per ounce levels for $1820 per ounce target for immediate short-term time horizon." On MCX, Anuj Gupta of IIFL Securities said that 48,100 to 47,800 per 10 gm should be taken as buying range for immediate short-term target of 48,700 to 49,000 per 10 gm."

Asked about the broader short-term range of gold prices in spot market and on MCX, Sugandha Sachdeva of Religar Broking said, "The broader range of gold prices in spot market is $1760 to $1865 per ounce, whereas on MCX this range works out to 46,800 to 49,500 per 10 gm." She said that gold investors should keep an eye on the three important central bank meetings lined up next week-ECB, Bank of England and the US Fed meeting which will provide further cues.

The Religare Broking expert said that gold prices are, however, capped at higher levels as there has been a hawkish tilt in the Fed’s stance on interest rate hike. We expect an accelerated pace of tightening measures with regards to monetary policy from the upcoming Fed meeting in an attempt to tame the rising price pressures. “Any sustainable upside move in gold can be envisaged only when the yellow metal gives a breakout above $1865 per ounce levels in spot market on a closing basis."

US consumer prices rose last month at a rate not seen in nearly 40 years, the US government reported on Friday, underscoring how inflation threatens the world's largest economy and President Joe Biden's public support.

The US Labor Department's consumer price index (CPI) jumped 6.8 percent compared to November of last year, its biggest gain since June 1982 as prices for gasoline, used cars, rent, food and other goods continued to climb.

While the report contained signs that the inflation wave may be reaching a crest, it nonetheless poses a political liability for the president, with the Republican opposition using it to argue against his economic policies.

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

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