Gold rates trade around 9-month high. Buy, sell or hold?

According to commodity market experts, after hawkish narrative by US Fed officials, gold pared its last week gains but has signaled fresh upside move on the weekend trade. They said that gold prices may go up to ₹55,500 levels in near term whereas in international markets, the yellow metal price may go up to $1,840 levels. Experts went on to add that MCX gold rates have strong support zone placed at ₹53,200 to ₹52,900 levels whereas in spot market, gold prices have strong support placed at $1,740 per ounce levels.

Speaking on recent triggers that dictated gold price in the week gone by, market expert Sugandha Sachdeva said, “As for the key data of the week, the CPI inflation rate cooled to 7.1% on an annual basis in November as against 7.7 per cent in October, which suppressed the greenback and boosted the precious metal towards the psychological ₹55,000 per 10 gm mark. Even as inflationary pressures were seen easing, gold pared some of the gains for the week amid the hawkish narrative of the US Fed. In the last policy meeting of the year, the US Fed downshifted to a 50 bps rate hike, smaller than the 75 bps rate hikes delivered in each of the last four meetings. However, it signaled higher peak rates in 2023, more than what the market was expecting.”

Sugandha further added that Fed wants to be sure that inflation has moderated meaningfully before it pauses its monetary tightening cycle. Besides, the ECB and the BOE also raised policy rates by 50 bps and hinted at further hikes in interest rates in their battle to tame inflationary pressures.

Expecting bull run in the precious metal to continue, Nirpendra Yadav, Senior Commodity Research Analyst at Swastika Investmart said, “Economic data from the US, China, and the eurozone make it clear that these major economies are grappling with pressure from high inflation and rising interest rates. Investors have chosen the dollar in place of gold this year due to continued interest rate hikes and the tight stance on monetary policy by central banks that could resume the uptrend in the US dollar index. But, the rise in corona cases after the easing of covid-19 restrictions in China and global uncertainties will give support to the precious metals at lower levels.”

“For the week ahead, gold prices look to consolidate before embarking on the next leg of the upside move. They are expected to remain supported by the ₹53,200 to ₹52,900 per 10 gm zone, while a breach of ₹55,000 per 10 gm mark is projected to fuel a further rise in prices towards ₹55,500 per 10 gm area. In the international markets, the level of $1,740 per ounce will act as good support, while on the way up, a break past $1,815 per ounce can push gold prices higher toward the $1,840 per ounce mark in the coming days,” said Sugandha Sachdeva.

On suggestion for long term gold investors, Colin Shah, MD at Kama Jewelry said, “The ECB and BoE are also expected to hike rates, thereby reducing investors’ interest in gold. We expect gold prices to trade sideways till H1CY23. Festive demand and global central banks pausing their rate-tightening policy will push demand for gold in H2CY23. However, the escalation of geopolitical tensions and recession in the West may change the price trajectory for gold.”

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.