By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all
For the past few weeks, Gold has been acting like an alligator lying in the water, waiting for its prey. Gold is trading in a tight range as the Federal Reserve lays the basis for future rate decreases while pushing back on the start of the easing cycle. Markets now expect the Fed to lower interest rates in May.
The gold market is maintaining support far above $2000/oz (Rs 61000) but is unable to break through the barrier above $2080/oz (Rs 64000). The market is in a wait-and-see mode, with an eye on upcoming US inflation data. A weak CPI this week would lift prices, but it may not be enough because traders/investors are waiting for clear indicators of a drop before committing.
The gold market has reached the end of its strong trend. Weaker inflation statistics could send gold prices down near $2080, but I don’t expect a breakout anytime soon. Inflation has fallen from its June 2022 highs, but it remains considerably above the 2% objective; at the same time, the United States economy is at full employment, with the jobless rate remaining at 4%.
Despite strong seasonal reasons, gold lost its late-2023 gains in January, but Red Sea hostilities, election uncertainty, and potential rate cuts will keep gold prices high this year. If we break through $2000 here, gold could realistically move back to $1950, and possibly even farther, because it would wash a lot.
Furthermore, physical demand for gold remains high due to persistent purchases by central banks and steady demand in emerging nations. Physical gold dealers in India charged premiums for the first time in four months last week, buoyed by an increase in purchases as local prices fell, while the coming Lunar New Year festival drove activity in China and elsewhere.
For this week, Gold is expected to continue its rangebound momentum from Rs 61000 to Rs 64000, while Silver is expected to trade in a range of Rs 70500 to Rs 73500.
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