BackGold price outlook: US Fed meeting to dollar index — top 5 triggers to watch
Gold price outlook: The major highlight of the next week would be the US Fed meeting, where the central bank is expected to lift rates by another 50 bps, the third rate hike in a row to tackle elevated inflation
PremiumGold price outlook: On account of US inflation soaring to record 41-year high, gold price posted strong gains towards the weekend. Gold price on Multi Commodity Exchange (MCX) on Friday ended at ₹51,694 per 10 gm levels, logging intraday gain of ₹689 per 10 gm on the Indian commodity bourse. Spot gold price too ascended more then $23 per ounce to $1870 levels, giving breakout on closing basis.
According to commodity market experts, gold price outlook for near term is positive and any dip in gold prices should be seen as buying opportunity. They suggested gold investors to keep an eye on some upcoming triggers like US Fed meeting, US retail sales and wholesale inflation numbers, industrial production data in China, dollar index, etc. as such factors are going to impact gold price at a larger extent.
Speaking on expected gold price triggers that may dictate precious bullion metal price in near term, Sugandha Sachdeva, Vice President — Commodity & Currency Research at Religare Broking Ltd said, "Going forward, the major highlight of the next week would be the US Fed meeting, where the central bank is expected to lift rates by another 50bps, the third rate hike in a row to tackle elevated inflation. In the economic calendar, retail sales & wholesale inflation numbers from the US will be on investors’ radar. Apart from the US, industrial production data from China & Europe will grab attention and provide further cues about global economic health. The dollar index movement would be crucial as the greenback is heading again towards two-decade highs that may limit the precious metal’s gains. Additionally, Indian inflation data will be a focal point for determining the rupee’s path which may further influence gold prices in the domestic markets."
Here we list out top 5 triggers that may dictate gold price in near term:
1] US Fed meeting: Next week, US Federal Reserve meeting is scheduled on 14th to 15th June and market is expecting 50 bps rate hike. If the US central bank decided in favour of rate hike, then it would be the third successive rate hike by the US Fed. US Fed interest rate hike is expected to work as a taper on gold price, whereas a rate hike below 50 bps or above 50 bps may lead to high volatility in the gold prices.
2] Dollar index: After retracing from record high, dollar index rebounded strongly last week and closed above 103 levels. "The dollar index movement would be crucial as the greenback is heading again towards two-decade highs that may limit the precious metal’s gains," said Sugandha Sachdeva of Religare Broking.
3] Chinese industrial production data: "Next week, China is expected to announce industrial production data, which will be crucial as any disappointing figure may boost slowdown speculations leading to rise in gold prices," said Anuj Gupta, Vice President — Research at IIFL Securities. He said that industrial data from some European nations is also expected and gold investors are advised to remain vigilant about these triggers as well.
4] Indian inflation data: "Indian inflation data will be a focal point for determining the rupee’s path which may further influence gold prices in the domestic markets," said Sugandha Sachdeva.
5] Crude oil prices: Energy prices remained buoyant amid Europe’s decision to phase out Russian supplies, along with strong demand and physical tightness of crude and refined products globally, contributing to inflation worries. So considering the diverse variables, even as the rate hike trajectory is negative for gold, scorching inflation and slowdown worries are likely to support safe-haven buying in gold prices from a near to medium-term perspective.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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