Gold price rises ahead of wedding season. Right time to buy?

According to commodity market experts, gold price has been stuck in a consolidation zone in recent weeks as the expectations of an aggressive interest rate hike trajectory by the US Fed have kept a lid on the upside, but the lingering Russia-Ukraine war is supporting the ‘safe-haven demand’ for the precious metal.  They said that beginning of wedding season may work as catalyst for the precious metal demand and said that MCX gold price may appreciate up to ₹53,500 per 10 gm in short term and ₹56,000 levels in medium term.

Asking gold investors to keep an eye on developments in the US economy; Sugandha Sachdeva, VP-Commodity & Currency Research at Religare Broking Ltd said, “The recent minutes of the Fed’s March meeting showed that members are primed to deliver half-point rate hikes in the coming months along with a quick reduction in the central bank’s balance sheet as the raging inflation remains an overriding concern. However, a rapid-fire pace of monetary policy tightening will most likely hurt the US economy, and could also derail the global economic growth. Any downside risks to growth shall underpin gold prices from a long-term perspective.”

On dynamics that will steer gold price in future; Sugandha Sachdeva of Religare Broking said, “There are a few dynamics that will steer the direction of gold in the coming sessions. To begin with the geopolitical developments, the US and Europe are planning new sanctions against Russia, which can further fuel tensions and even prolong the rise of global inflationary pressures. This may well entice safe-haven demand for gold. The other key trigger to watch out for would be the movement of the dollar index which looks to witness a breather from the psychological 100 mark while making way for igniting buying interest in gold.”

“Besides, the strength in the dollar index, which is hovering close to the 100 mark, is one of the key reasons behind the lackluster performance of the precious metal. Also, the US 10-year Treasury yield marched towards a three-year high, further adding pressure on the metal,” she added.

Triggers that may dictate gold price in near term; Anuj Gupta, Vice President — Research at IIFL Securities said, “US data for retail sale and inflation will an important trigger for the yellow metal price. Apart from this, one needs to keep an eye on the Covid condition in China. Lockdown has been imposed in Shanghai and any further spread of the pandemic may not be a good news for the global economy as China is second largest economy in the world.” However, he said that beginning of wedding season in India is going to remain a big domestic trigger for the yellow metal as demand is expected to go up during this wedding season.

Speaking on gold price outlook in spot market, Anuj Gupta of IIFL Securities said, “Spot gold price is facing resistance at $1950 to $1960 levels whereas it has immediate support place at $1900 levels. However, it’s strong support is placed at $1870 per ounce levels. If the previous metal manages to break its immediate hurdle and sustains above $1960 levels, then it may go up to $2000 levels in short term.”

Sugandha Sachdeva of Religare Broking said, “Considering the prevailing macro-economic environment, gold looks positive, but not very bullish. Downside support for the metal is pegged at ₹48,800 per 10 gm mark or $1840 per ounce, while on the upside it can edge higher towards levels of close to ₹53,500 per 10 gm initially and then ₹56,000 per 10 gm or $2075 per ounce level from a medium-term perspective.”

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