Sharp fall in gold price is due to the US Fed's announcement to hike interest rates twice in 2023 and the US Dollar (USD) gaining strength against major global currencies, say experts
Gold price in the last one week has crashed over ₹2000 per 10 gm at the Multi Commodity Exchange (MCX). According to the commodity experts, weakness in the yellow metal price is due to the US Fed's announcement to hike interest rates twice in 2023 and the US Dollar (USD) gaining strength against major global currencies. However, they maintained that the precious metal price crash is temporary and gold investors should see this dip as a buying opportunity. The bullion experts went on to add that gold price will soon rebound and go up to ₹48,500 per 10 gm in one month after the trend reversal.
Speaking on the reason for gold price crash Anuj Gupta, Vice President — Commodity & Currency Trade at IIFL Securities said, "This gold price crash can be attributed to two major reasons — US Fed announcement to hike interest rates twice in 2023 and the USD gaining strength against the major global currencies including Indian National Rupee (INR). The optimistic view of US Federal Reserve on the US economy led to sharp rise in the bond yield as well."
Asked about gold price outlook Amit Sajeja, Vice President — Research at Motilal Oswal said, "Decline in yellow metal due to the US Fed announcement to hike interest rate is temporary. I am expecting trend reversal in next three to four trade sessions. USD was trading sideways for the last few weeks and this Fed announcement worked as a trigger for the US bond yield and USD rise. This sentimental rise in bond yield and USD is expected to calm down in next three to four days and hence trend reversal is expected in the yellow metal in next three to four days."
Amit Sajeja of Motilal Oswal said that sharp decline in the gold price should be seen as an investment opportunity by gold investors citing, "Currently, gold price has immediate support at ₹46,500 per 10 gm at MCX while in the international market the yellow metal has support at $1750 per ounce. One should wait for the next three to four days as gold price is expected to make its bottom again."
In the current market situation NS Ramaswamy, Head of Commodities at Ventura Securities Ltd is expecting gold price to go up to ₹45,500 per 10 gm at MCX.
Advising gold buyers and investors to buy gold around its possible bottom expected in next three to four days Amit Sajeja of Motilal Oswal said, "One should wait for the trend reversal in the gold price that is expected in next three to four days and buy gold for the target of ₹48,500 in next one month after the trend reversal."