Gold prices have been on a rollercoaster ride in recent years, driven by a wide range of factors, including global economic conditions, geopolitical tensions, and monetary policy decisions by major central banks. In the domestic market, yellow metal prices have been trading above the Rs 60,000 level, with uncertainty over monetary policy decisions and concerns over a possible banking crisis contributing to the volatility.
As of May 3, 2023, gold futures (June 5) were up by 0.16 percent, or Rs 99, at Rs 60,727 per 10 grammes on the Multi Commodity Exchange (MCX). The MCX gold futures for June traded between the range of Rs 60,707 and Rs 60,765 on May 3, 2023. Meanwhile, silver futures (July 5) were up by Rs 112 or 0.15 percent at Rs 76,360 per kg.
In the international market, COMEX gold traded at $2026.8 per ounce. The yellow metal extended its previous session gain in Asian trade on renewed fears of a banking crisis and uncertainty over monetary policy decisions before a Federal Reserve rate decision. The rise in gold prices followed the government-brokered takeover of First Republic Bank by JPMorgan Chase & Co., which sparked concerns that several other regional US lenders were facing solvency issues. The dollar index is trading at the 101.50 level. The COMEX gold has support near $2,015 and resistance at $2,038, according to NS Ramaswamy, Head of Commodities at Ventura Securities. Spot gold traded flat in the international market and stood at $2,017.5 per ounce, which was flat by 0.04 percent.
Traders are expected to be cautious ahead of the US ADP data and the US Federal Open Market Committee's (FOMC) monetary policy decision. The US Federal Reserve is expected to hike rates by 25 basis points; however, the major focus will be on clues to a possible pause in its rate hike spree and the Central Bank's take on the banking turmoil, according to Praveen Singh, Associate VP, Fundamental Currencies and Commodities at Sharekhan by BNP Paribas. Singh added that the yellow metal faces strong resistance at $2020, followed by $2050 as the key level before it may approach its all-time level around $2075. Support is seen at $2000/$1977.
Neha Qureshi, Senior Technical & Derivative Research Analyst at Anand Rathi Commodities & Currencies, suggests buying gold June futures on the dip at 60,300, keeping a stop loss of Rs 60,100 and a target price of Rs 60,700. For the Silver July contract, she suggests buying on the dip at Rs 75,500 with a stop loss of Rs 74,500 and a target of Rs 77,500.
Gold prices in India have fluctuated since 2023. The price of gold has increased considerably since 2022, growing by roughly Rs. 3,000 in the first six months of the year, representing a gain of nearly 6.5 percent. The Russia-Ukraine war, US Fed rate hikes, and inflation have all contributed to rising gold prices. The rise in gold demand has caused the stock market to decline since the beginning of the year.
Investing in gold has long been considered a haven for investors during times of economic uncertainty. The yellow metal is often seen as a hedge against inflation and currency devaluation, and its value tends to rise during times of market volatility. With the current uncertainty surrounding the US Federal Reserve's monetary policy decisions, many investors are considering gold a safe investment option.
Additionally, political tensions and trade wars between major economies such as the United States and China have also led to investors seeking out the haven of gold as a means of hedging their investments against market volatility.
Another factor that has played a significant role in the rise in gold prices is inflation. Inflation refers to the rate at which the general price level of goods and services in an economy is increasing. As inflation rises, the purchasing power of a currency declines, and this can cause people to invest in assets such as gold that hold their value better than fiat currencies.
Moreover, the Russian-Ukrainian conflict has also led to increased demand for gold. The political tension and the possibility of sanctions have led investors to move their money into safe-haven assets such as gold.
The US Federal Reserve's interest rate hikes have also played a role in the rise of gold prices. The interest rate hikes have led to the strengthening of the US dollar, and as a result, other currencies such as the Indian rupee have weakened. This has made gold a more attractive investment as it is denominated in US dollars, making it more expensive for investors holding other currencies.
Despite the volatility in gold prices, experts remain optimistic about the long-term outlook for the yellow metal. According to a report by the World Gold Council, the demand for gold is expected to remain strong in the coming years due to several factors, including rising geopolitical uncertainty, increasing inflation, and the growth of emerging markets such as India and China.
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In conclusion, gold prices in India have been rising steadily over the past few years due to several factors, including inflation, political tensions, and US Federal Reserve rate hikes. Despite the volatility in gold prices, experts remain optimistic about the long-term outlook for the yellow metal. When it comes to investing in gold, it is essential to choose a reliable and trustworthy partner. Goldsikka Limited is a leading player in the gold investment space and offers a range of investment plans and other services to its customers.