By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all

This week’s important events included a Federal Reserve policy meeting and nonfarm payroll data from the United States. The Fed maintained the monetary status quo, as expected, with Powell stating that a rate cut in March is unlikely. He underlined that continuous inflation increases are unclear and hinted at the prospect of commencing rate cuts later this year. He highlighted (again) that decisions will be made on a meeting-by-meeting basis, expressing his judgement that the policy rate has likely reached its top but also implying that a rate cut in March is unclear.

Nonfarm payrolls in the US increased by 353,000, considerably beyond the market consensus of 180,000. November’s growth of 216,000 was revised up to 333,000. Precious Metals fell and reversed the majority of its weekly gains following the January jobs data.

However, precious metals gained from rising global concerns and falling US yields to begin the week. A drone strike on a US base near Jordan’s border with Syria resulted in three deaths and over 20 injuries, raising concerns about a worsening Middle East crisis.

In a nutshell, Precious Metals has been going through a tug-of-war for the past few days. On one side, there is the FED stance which has turned hawkish over the past two weeks. Fed is not ready for a rate cut in March amid sticky inflation, so the high probability of rate cuts is shifted to May 2024. This hawkishness is negative for precious metals. On the positive side, precious metals are getting safe-heaven bids from emerging geopolitical risks arising from the Middle East and banking stock selloff in the US.

Gold prices are expected to trade in a range of $2000 to $2100 in international markets and from Rs 62000 to Rs 64000 in domestic market in February. Silver is expected to trade in a range of $22 and $24 in international markets, while Rs 70500 to Rs 73500 in domestic markets.

 

 

 

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