For the second day in a row, gold prices in India decreased, but the declines were contained as they remained stable globally. It is to be noted here, that the price of gold hit a one-month high all around the world on Tuesday, but it was trading down in India.
On Multi Commodity Exchange (MCX), Silver futures decreased 0.4 percent to 58,100 per kg, while gold futures were trading lower at 51,480 per 10 grams. Gold was steady in world markets at $1,775.29 per ounce. Globally gold prices are high due to a decline in US Treasury yields amid a deepening recession.
Reasons behind high gold price, globally.
The number of futures that are net short of gold grew by 19,093. This demonstrates that hedge funds continue to think that the recent recovery is short-term and that gold still has the potential to fall. Despite the US Fed’s claim that the US economy is not in a recession, various reports suggest one is imminent. The world has witnessed eight recessions have occurred in the last fifty years, and in six of them, gold prices have increased. It had fallen in two of them but only by a single digit. Therefore, it is expected that gold will trade higher over the medium run.
On worries that US-China relations may worsen as a result of Nancy Pelosi’s planned trip to Taiwan, gold also saw a boost. She would be the highest-ranking US official to visit the ROC in twenty-five years, and Beijing has threatened repercussions if the trip proceeds.
“As market participants discuss the Federal Reserve’s stance on monetary policy, gold trades stood near $1775/oz, backed by the US dollar’s ongoing decline and bond yields. Safe haven amid tensions between the US and China over House Speaker Nancy Pelosi’s trip to Taiwan is another factor boosting pricing,” according to Ravindra Rao, VP-Head Commodity Research at Kotak Securities.
Demand for “safe haven” gold has increased as a result of the world economy’s deterioration. A significant portion of the safe haven flows had recently been observed to be heading toward the dollar index rather than gold, but in recent weeks, gold appears to be returning to popularity. The US Fed’s aggressive stance and the deteriorating economic situation in the US are to blame for this change in trend. Around $1800 is where we anticipate some resistance for gold, but any decline will present a nice buying opportunity.
“However, remarks from Fed officials, worries about China and India’s consumer demand, and reduced ETF activity despite price rebound are all putting pressure on the gold price. The price of gold has significantly recovered from its lows and is currently trading above $1750/oz, showing strong momentum. However, the gains might slow down because Fed policymakers are probably going to continue supporting rate increases while inflation is still not in control,” he added.
Other precious metals.
Considering other precious metals, the silver price decreased by 0.4 percent to $20.26 an ounce, while platinum increased by 0.3 percent to $909.10.
According to Rahul Kalantri, VP Commodities at Mehta Equities Ltd, “The OPEC+ summit and the geopolitical tensions between the USA and China are expected to keep both precious metals volatile this week. Support and resistance levels for gold are $1755 and 1742, respectively. Support for silver lies between $20.10 and 19.75, while resistance lies between $20.55 and 20.82. Support for gold in rupees is located between 51,050 and 51,780; resistance is between 51,580 and 51,740. Support and resistance for silver are respectively located at Rs. 57,550 and Rs. 56,940.”
