‘Gold price may touch $2300 level by end of September 2024’
Amid correction in the bullion metal prices, after hotter-than-expected US inflation and PPI print, the stock market and decentralized digital currency market have also fallen under the bears’ grip. Anuj Gupta, Head — Commodity & Currency at HDFC Securities talks to Asit Manohar of Mint and unveils triggers that may lend support to the falling gold rates today. The HDFC Securities expert also discussed the risk-reward ratio available in the current bullion market. Below are the edited excerpts:
Gold prices have retraced from the recent all-time high. Do you see a bounce back in the near term?
I believe that in the near term, gold price may consolidate in an upper-end range following mixed global cues. The disappointing US inflation data has hit expectations for a near-term US Fed interest rate cut. Meanwhile, ongoing geopolitical unrest and weakness in the Eurozone and Chinese economies is expected to provide support to falling gold prices. Apart from this, global central banks across world are buying gold, which may lend support to the precious yellow metal price.
As the US Fed interest rate is in the market’s focus, what is your expectation from the central bank of America?
After the hotter-than-expected US inflation data, the US Fed is currently in a dilemma over interest rate cuts. I believe that the US Fed may remain data-dependent for a possible US Fed interest rate cut. As per the CME Fed fund tool, swap markets are now indicating a 55% chance of a US Fed interest rate cut in June, down from 67% a week ago. So, chances are high that the US Fed may delay interest rate cuts until July.
How do you look at the risk-reward ratio in gold and silver prices after a rebound in US dollar rates?
Gold prices rallied more than 5.0% in the last two weeks, so traders should wait for a 2% to 3% correction before taking long positions in gold and silver. Additionally, hotter-than-expected US inflation data may force the Federal Reserve to keep interest rates elevated, which spurred gains in Treasury yields as well as the dollar index, both negatives for gold.
Surprisingly, gold, equity, and bitcoins are moving in the same direction. Any specific reason?
Liquidity and momentum drive all asset classes together. Apart from this, separate factors like continued high demand for bitcoin ETFs boosted bitcoin. Safe haven demand, central bank buying, and the expectation of the Fed nearing a pivot favour gold bull.
Crude oil price on MCX has ascended to a 4-month high. What is fueling oil prices these days?
Crude oil prices surged to a fresh year high in recent times on the back of tight supply and geopolitical unrest. Production cuts from OPEC and its alliance have shown signs of tightening supplies in the short term. Additionally, money managers increased their net long position in WTI crude oil, and their net long position was most bullish in 19 weeks, which is one of the factors for the recent rally.
What are the triggers that are expected to dictate gold and silver prices in the near term?
In the near term, US Fed pivot timing is a key trigger for bullion in the next round of the uptrend. Apart from this, any black swan event, further escalation in geopolitical unrest, a recession scenario, and political uncertainty, boost safe-haven demand in gold.
In the medium to long term (by the end of September 2024), I am still bullish on gold, and see the Comex spot gold price to rally towards $2250 and $2300 levels. In the domestic markets, I see MCX gold rates around ₹67,000 to ₹67,500.
As of now, the silver technical setup looks broader range trading will continue until a decisive breakout above $27.0. We also believe the downside looks limited in terms of positive fundamentals. It has a strong support area of around $20. Investors should keep investing in silver with a stop loss of $20.
There are various options available to invest in exchange-traded funds, futures markets, physical forms, and mutual funds. For active inventors, the futures market is a good option, while for passive investors, mutual funds and ETFs are good options.
Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 16 Mar 2024, 02:36 PM IST
Ganesh
http://ganesh@finplay.inFinance enthusiast, Mutual fund expert.