Gold trades volatile as the dollar rises; what should you do?

Gold prices moved in a tight range in international markets with concerns over a looming recession lending some support to the yellow metal.

On MCX, Gold was 0.10 per cent down at ₹60,200 per 10 gram around 12 pm.

Experts pointed out that gold saw some upside in morning trades from bargain buying as US treasury yields have declined this week. However, a higher US dollar index and lower crude oil prices today are negative influences on the metals markets.

What affects gold prices?

Gold prices are influenced by various factors, including the economic outlook, inflation, interest rates, the dollar’s movement and investors’ risk appetite.

Since the global economic outlook is sombre, it will support gold prices. However, in case of a pause in rate hikes by the US Fed, gold prices may see some pressure.

Moreover, international gold is dollar-dominated so when the dollar rises, it makes gold expensive and hit its demand and return potential.

Experts’ Views on Gold

Rahul Kalantri, VP -Commodities at Mehta Equities said that softer-than-expected US consumer confidence data points to a slowing consumption this year, which is a damper on economic growth. Uncertainty over monetary policy and a stronger dollar had weighed on gold in recent weeks, as markets were split over when the Federal Reserve could halt its rate hike cycle.

“Gold has support at $1980-1965 while resistance is at $2005-2015. Silver has support at $24.80-24.58, while resistance is at $25.20-25.32. In INR terms, gold has support at ₹59,940-59,750, while resistance is at ₹60,520, 60,720. Silver has support at ₹73,920-73,510, while resistance is at ₹75,050–75,610,” said Kalantri.

Manoj Kumar Jain of Prithvifinmart Commodity Research expects gold prices to remain volatile this week amid volatility in the dollar index and uncertainty over Fed rate hikes.

“Gold is expected to hold $1,984 per troy ounce and silver could hold a key support level of $24.440 per troy ounce in today’s session. Gold has support at $1,992-1,984, while resistance at $2,014-2,022 per troy ounce,” said Jain.

“At MCX, gold is having support at ₹60,060-59,800 and resistance at ₹60,440-60,650. We suggest buying gold on dips around ₹60,000 with a stop loss of ₹59,700 for the target of ₹60,550,” Jain said.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.