Gold prices rebound as the US dollar bounces back from a 3-month high. Should you buy?
Gold price today: Following the US dollar’s weakness following the release of US labor data showing slower wage growth, gold prices rallied strongly over the weekend session. Gold futures contract for April 2023 on Multi Commodity Exchange (MCX) won €829 per 10 grams and ended at €56,130 levels on Friday. In the international spot market, gold rose more than 2 percent on Friday to close at about $1,867 an ounce.
According to commodity market experts, gold prices are currently on an upward trend as US labor data showing slower wage growth has allayed concerns about US inflation and therefore the market is expecting a modest rate hike by the US Fed. They said the gold price has immediate support today at $1,820 an ounce and is facing hurdles on the upside at $1,890 an ounce. On MCX, they said that the gold price has received immediate support €55,200 while facing resistance at €56,700 and €57,200 per 10 gram levels. They said the overall trend for the yellow metal is bullish as news of Silver Valley Bank’s bankruptcy is expected to depress stock assets in the near term.
US dollar exchange rate
Anuj Gupta, Vice President — Research at IIFL Securities said of the reason for the strong recovery in gold prices: “Gold prices have recently corrected due to the appreciation of the US dollar. is rife with speculation that the US Fed official will take a modest approach to rate hikes at the upcoming FOMC meeting scheduled for this month. Index from 3-month high.”
The US Dollar Index fell 0.65 percent on Friday to close at 104,625 levels.
Market expert Sugandha Sachdeva said of the key triggers that helped yellow metal follow its recent trajectory: “The week’s key economic data highlighted that the US economy witnessed an increase of 311,000 jobs, exceeding expectations of 205,000 jobs, but it unemployment rate rose to 3.6 percent from an all-time low of 3.4 percent last month, and wage growth slowed. Sugandha added that the significant volatility in stocks has led investors to flock to gold as a means of portfolio diversification.
Silicon Valley Bank crisis
Nirpendra Yadav, Senior Commodity Research Analyst at Swastika Investmart, said of why gold prices skyrocketed on Friday deals: “Recovery in the price of precious yellow metal can be attributed to an 8 percent drop in cryptocurrency Bitcoin, along with rising US unemployment claims and The Unemployment Rate News of Silicon Valley Bank’s bankruptcy put selling pressure on the stock market, which also supported precious metals at lower levels.”
Gold price outlook
Asked about the near-term outlook for gold prices, Sugandha Sachdeva said: “For the week ahead, it looks like the precious metal will aim for levels of around €56,700 per 10 grams and $1,890 per ounce, while support will be at €55,200 per 10-gram brand ($1,820 per ounce). The focus will now shift to the next reading of the US consumer price index, which will set expectations for the next interest rate hike and also provide more clarity on the near-term trajectory of gold prices.”
disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms, and not of Mint. We recommend that investors consult certified experts before making investment decisions.
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