Gold rate rebounds after hitting one-month lows. Should you buy now?

According to commodity market experts, gold prices have bounced back as dollar index came down from around 113 levels to below 111 mark. They said that the US Fed sounded more hawkish than expected and dampened hopes of any change in its tightening plans. This boosted the greenback toward the 113 mark. However, it gave up much of its gains after the Chinese move of ‘zero Covid’ policy. This is expected to strengthen yuan and boost demand for metals including bullions. They said that currently gold rates are in the range of $1,620 to $1,685 per ounce levels. On breaching the upper band, it may go up to $1,710 per ounce levels. On MCX, they said that gold price is expected to remain in the range of 49,800 per ounce to ₹50,900 per 10 gm levels. On breaching the immediate resistance, it may go up to ₹51,300 and ₹51,800 levels. They advised gold investors to keep these pivot levels in mind and maintain ‘buy on dips’ strategy as overall sentiment for gold may continue to remain ‘sideways to bullish.’

Reasons for gold price rebound

Speaking on the reason for rebound in gold prices, Sugandha Sachdeva, Vice President — Commodity & Currency Research at Religare Broking said, “A positive week had set out for gold wherein it surged towards a three-week high gaining by 1.27% at the domestic bourses and more than 2% in the international markets. The dollar index gave up much of the gains registered during the week to plunge below the 111 mark, which underpinned gold prices around the crucial Rs.50000 per 10gm mark, or $1615 per ounce mark.”

The Religare expert said that the US Fed hiked interest rates by 75 bps to a target range of 3.75 per cent to 4 per cent, the fourth large rate hike in a row as it remains strongly committed to combat inflationary pressures. The US central bank sounded more hawkish than expected and dampened hopes of any change in its tightening plans. This boosted the greenback toward the 113 mark. Besides, the Bank of England also raised rates by 75 bps — its largest single increase in 33 years, but maintained a slightly dovish stance and signaled a softer tightening path in the coming months.

“As for the other key economic data, the US job market remains quite healthy, where the US economy added 261,000 jobs in October, much more than the estimates of 200,000 job additions, though slightly less as compared to September. However the unemployment rate rose higher to 3.7 per cent as against 3.5 per cent in the previous month and hourly wages slowed down to 4.7 per cent as compared to 5 per cent, which led to a downward drift in the dollar index from the crucial 113 mark,” Sugandha Sachdeva of Religare Broking said.

Gold price outlook

Speaking on gold price outlook, Anuj Gupta, Vice President — Research at IIFL Securities said, “Gold rates today are mainly dictated by the global triggers, especially the US dollar. So, one needs to keep an eye on spot gold price where immediate support for gold price today is placed at $1,620 per ounce levels whereas strong support is placed at $1,600 per ounce levels. Similarly, on the upper side, immediate resistance for gold rates today is placed at $1,685 levels whereas strong resistance zone exists at around $1,710 per ounce levels.” 

On gold rates outlook at domestic bourses, Anuj Gupta of IIFL Securities said, “On MCX, immediate support for gold rates today is placed at ₹49,800 whereas it is facing immediate resistance at ₹50,900. On breaching ₹50,900 resistance, gold rates may surge up to ₹51,300 and ₹51,700 per 10 gm levels in short term. My suggestion to gold investors is to maintain buy on dips and keep these pivot levels in mind while taking or squaring-off their positions in the precious yellow metal.”

Gold price today: Chinese trigger to look at

Echoing with Anuj Gupta’s views, Sugandha Sachdeva said, “As for the outlook ahead, we envisage gold prices to remain supported around ₹49,800 to ₹50,000 per 10 gm zone while a decisive break above the crucial ₹50,050 per 10 gm mark would lead to further upside momentum in the yellow metal and push prices towards ₹51,700 per 10 gm mark in the coming days.”

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