Gold value fails to carry after breakout. Good alternative to purchase, say consultants

Gold value immediately: After giving breakout at $1935 per ounce ranges in spot market final week, gold value fail to carry this benefit. After hitting round $1852 ranges, yellow steel value has come under $1800 ranges as soon as once more. On Friday, valuable bullion steel closed round $1791 per ounce ranges in worldwide market whereas MCX gold price for February future contract ended at 47,678 per 10 gm, ₹232 or round 0.50 per cent decrease from its Thursday shut.

According to commodity market consultants, slide in gold value final week was primarily because of the US Fed’s hawkish stance on rate of interest hike. However, they maintained that crashing fairness market, greenback index in overbought situation, depreciation in Indian National Rupee (INR) towards the US greenback (USD) and anticipated rise in crude oil value as a result of Russia-Ukraine battle are a number of the main triggers which will gasoline gold value rally in close to time period.

International triggers for gold value

Speaking on the worldwide triggers which will help gold value rally in close to time period; Anuj Gupta, Vice President — Commodity & Currency Trade at IIFL Securities mentioned, “Gold prices have recently corrected strongly after the Fed’s hawkish stance on interest rate hike. However, global inflation still remains a major concern as current Russia Ukraine conflict may fuel crude oil prices in the international market again and if this conflict last a little longer, Brent Crude oil prices may go up to $120 per barrel levels, which may further worsen the global inflation scenario leading to rise in gold price.”

Echoing with Anuj Gupta’s views; Amit Sajeja, Vice President — Commodity Research at Motilal Oswal mentioned, “Global inflation will persist even when the Russia-Ukraine conflict ends sooner than expected. Average inflation in the US is expected to remain around 4.5 per cent to 5 per cent, which is much higher than the target figure of 2 per cent. Dollar Index has also appreciated to an overbought condition and it may tumble anytime leading to rise in gold price in spot market.”

INR vs USD: How fall in rupee might affect gold value

Speaking on the home set off than might gasoline MCX gold charges, Amit Sajeja of Motilal Oswal mentioned, “Rupee has been depreciating against the US dollar for last one fortnight. It has come down from 74 levels to ₹75.3 per US dollar levels and it is expected to further go down up to 76 levels. So, MCX gold prices are expected to shot up due to slide in Indian rupee against the US dollar as well. So, one can expect MCX gold rate to go northward even when the spot gold price remains steady.”

On how fall in rupee impacts gold value in home market, Anuj Gupta of IIFL Securities mentioned, “Re 1 fall against the US dollar leads to rise in domestic gold price by around ₹250 to ₹300 per 10 gm. In last one fortnight, we have witnessed around ₹1.3 slide against the US dollar as it has come down from 74 to around 75.3 levels. So, around ₹500 per 10 gm gold price rally has been contained by the recent Fed’s hawkish stance on key rates but further slide in INR against USD may spark fresh gold price rally of near ₹500 per 10 gm in the domestic market.”

Gold value outlook

Expecting home gold value to observe spot market, Amit Sajeja mentioned, “Spot gold price still have strong support at 1760 per once levels and now it is trading in a broader range of 1760 to 1865. However, this time gold price rally won’t be one directional and sharp, so one should keep on booking partial profit and upgrade trailing stop loss on each breakout. Immediate breakout expected in spot gold price is at $1805 followed by 1865 per ounce levels. So, one is advised to upgrade trailing stop loss at $1780 after breakout at $1805 levels whereas they can further upgrade their trailing stop loss at $1830 levels once there is breakout at $1865 per ounce levels on closing basis. Gold price in spot market may go up to $1900 per ounce levels after giving breakout at $1865 levels.”

Advising purchase on dips technique for gold buyers in home market, Anuj Gupta mentioned, “MCX gold rate has strong support at 47,100 levels. So, gold investors can buy gold in ₹47,500 to ₹47,600 range at MCX for immediate target of ₹47,900 per 10 gm levels. However, one can hold MCX gold February future contract for short term target of ₹48,300 maintaining stop loss at ₹47,100 levels.” Anuj Gupta of IIFL Securities went on so as to add that MCX gold value might go as much as ₹48,500 and ₹48,700 instantly after breaching ₹48,300 hurdle.

Disclaimer: The views and proposals made above are these of particular person analysts or broking firms, and never of Mint.

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