Gold rates today near five week low. Should you buy in this correction?

According to commodity market experts, US Fed rate hike concern and slew of strong US economic data helped US dollar to gain strength against major global currencies. They said that dollar index regaining 104 levels on Thursday after dipping below 103 mark should be seen from this angle. Hence, rise in US dollar rates put breaks on gold price rally. They advised investors to maintain buy on dips as gold rates today is in ₹55,500 to ₹57,200 per 10 gm range.

Highlighting the reasons that put breaks on gold price rally, market expert Sugandha Sachdeva said, “Concerns of tighter policy by the US Fed for longer and a slew of robust economic data from the US have been the key headwinds that knocked down gold prices towards a five-week low at the domestic markets. US retail sales rose by 3 percent in January v/s 1.8 per cent expected, the largest increase since March 2021 in a sign of strength in consumer spending. Besides, monthly US producer prices surged the most in seven months in January indicating a rebound in inflation in the US at the wholesale level.”

Sugandha went on to add that weekly jobless claims rose less than expected for the week ending Feb 11, reinforcing the fact that the US economy remains quite resilient despite the steep rate hikes since last year. Rise in US dollar rates “Hawkish remarks from various central bank officials hinting at higher borrowing costs in the US to tackle inflation drove the dollar higher and suppressed the non-interest-bearing gold. The peak rate in the US is now expected to be 5.3% which pushed the US treasury yields towards 2-month highs, another negative trigger for prices,” Sugandha added.

Nirpendra Yadav, Senior Commodity Research Analyst, Swastika Investmart said, “Investors are waiting to see how the Federal Reserve will react to the data, noting that the Fed has largely adopted anti-inflation rhetoric. Inflation has remained stable at a level that makes the Fed likely to continue raising interest rates for the foreseeable future. ” He said that Fed meeting minutes and US GDP data will be important for precious metals this week.

On gold price outlook for near term, Sugandha Sachdeva said, “The yellow metal breached the crucial support of ₹56,500 per 10 gm mark last week to edge lower and the path for the week ahead also looks slightly bumpy, where it is expected to hover in the range of ₹55,500 to ₹57,200 per 10 gm. Basically the movement of the greenback would define the direction of gold.” Investment strategy in near term Advising ‘buy on dips’ strategy to gold investors, Anuj Gupta, Vice President — Research at IIFL Securities said, “US dollar is in overbought condition and positive moves at dollar index seems limited. We witnessed this on Friday when the index came below 104, which triggered buying in gold. So, one should avoid taking any short position in gold and maintain buying on dips. Immediate support for gold rates today on MCX is placed at ₹55,500 whereas major support lies at around ₹54,800 per 10 gm levels. On higher side, immediate hurdle for the yellow metal lies at ₹56,800 whereas ₹57,100 to ₹57,200 zone would act as major upper hurdle. In international market, immediate support for gold is placed at $1,830 levels whereas major support is placed at $1,800 per ounce levels. On higher side, gold price is facing resistance at $1,890 levels.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.