Bullion price has benefited from broad-based US Dollar weakness and gained nearly 2% this week. Gold and Silver prices has mainly got a boost on change in FED stance from hawkish to dovish.
• In his final public speech before the Federal Reserve’s blackout period begins on December 3, FOMC Chairman Jerome Powell agreed that slowing the pace of rate rises makes sense. As a result, the US dollar came under severe selling pressure, and gold and silver gained more than 1% following the speech.
• Powell’s statement on Wednesday sparked widespread outrage. He reinforced his message that, while the rate hike pace is likely to moderate, the FED will require tight policy for “some time” – aka “higher for longer.” As a result, the 10-year US Treasury bond yield fell roughly 4%, providing additional support to the inversely correlated Gold.
• On Friday, Nonfarm payrolls increased by 263K in November, with the unemployment rate remaining unchanged at 3.7 percent and average hourly earnings increasing by 0.6 percent. Personal income and spending climbed by 0.7 and 0.8 percent, respectively, in October, while the core PCE deflator increased by 0.2 and 5.0 percent, respectively (YoY).
• If the Federal Reserve wasn’t worried about wage growth before yesterday’s Nonfarm payroll report, their concerns may have risen with this one. Following the release of this data, the CME FED watch tool indicates an equal probability of a 25-basis point and a 50-basis point rate hike on February 1st.
• Furthermore, China reported record daily coronavirus cases over the weekend, and the PMI data revealed that business activity in the industrial and service sectors dropped in November, sparking concerns about a worldwide economic slump. Renewed confidence about China’s continued shift away from its zero-covid policy prompted investors to stay optimistic about gold demand improving.
Domestically, gold and silver prices have started its glitter and bull run. Buy on dips should be the strategy used for next targets are Rs 54000 and Rs 67000 respectively in the month of December.