Prices for gold and silver dropped by around 2%, supporting a bearish view on the FED’s hawkish shift towards further rate hikes that increased the value of the dollar. Traders may need to pause before concluding that the FED has finished tightening after inflation and jobs metrics consistently beat market expectations. Since inflation is still high and the most recent data showed a rise in consumer prices above expectations, the FED may choose to use 50 basis points during its upcoming policy meetings.
Other headlines that dominated the market last week are:
• In 2022, China imported 1,343 tonnes of gold, the most since 2018. The total amount of gold imported for the year increased by 64% from 2021.
• India’s imports of gold in January fell by 76% from a year earlier to a 32-month low due to weak demand after domestic prices soared to all-time highs and as jewellers put off purchases in anticipation of a drop in import duties. In January, the nation imported 11 tonnes of gold, down from 45 tonnes the previous month.
• Recent weeks have seen an increase in Treasury yields due to a string of extremely positive economic data. The yield on a 10-year Treasury note is almost back to where it was at the beginning of the year, and the yield on a two-year note is higher than it was in 2023.
Technically, Gold has fallen further and is now clearly below the 55-DMA, currently seen at Rs 56300. This increases the likelihood of further losses towards the long-term 200-DMA, currently seen around Rs 55000, which we expect to floor the precious metal and will offer an opportunity to buy.
Disclaimer: This report contains the opinion of the author, which is not to be construed as investment advices. The author, Directors, other employees of Augmont Enterprise Private Ltd. and its affiliates cannot be held responsible for the accuracy of the information presented herein or for the results of the positions taken based on the opinions expressed above. The above-mentioned opinions are based on the information, which is believed to be accurate, and no assurance can be given for the accuracy of the information. The author, directors and other employees and any affiliates of Augmont Enterprise Private Ltd cannot be held responsible for any losses in trading. In no event should the content of this research report be construed as an express or an implied promise, guarantee or implication by or from Augmont Enterprise Private Ltd. that the reader or client will profit or the losses can or will be limited in any manner whatsoever. Past results are no indications of future performance. Information provided in this report is intended solely for informative purposes and is obtained from sources believed to be reliable. The information contained in this report is no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. We do not offer any sort of portfolio advisory, portfolio management or investment advisory services. The reports are only for information purpose and are not to be construed as investment advices.