Gold, silver rate today are rising on these 5 reasons — weakness in US dollar rate, poor US data, US Fed interest rate peak out, fear of slowdown and rising oil prices, say experts
Gold rate today extended its rally on yet another session after hitting life-time high of ₹61,145 per 10 gm on Multi Commodity Exchange (MCX) on Tuesday. While climbing to record high on MCX, gold price hit 13-month high in international market. Silver rates today are also in uptrend hitting 12-month high in international market whereas it hit 22-month high on MCX.
According to commodity market experts, reason for rise in gold and silver rates in commodity market today can be attributed to these 5 reasons — weakness in US dollar rate, poor US data, US Fed interest rate peak out, economic uncertainty and rising crude oil prices. They said that gold price in India have strong support placed at ₹59,500 levels while in international market the yellow metal has strong support placed at $2,010 levels. Likewise, silver rate today has strong support placed at $23 per ounce in international market whereas in domestic market, white metal has strong support placed at ₹70,000 per kg levels.
On why gold and silver rates are rising today, Anuj Gupta, Vice President — Research at IIFL Securities said, "Gold and silver prices are surging today due to these 5 basic reasons — slump in US dollar, poor US data, peaking out interest rates, fear of economic slowdown and soaring oil prices across world."
Weakness in US dollar
"The primary reasons for the rally in the precious metals are the softening dollar index. The Dollar Index has fallen to a 2-month low as there is a widening belief that the Fed may not only pause but start slashing rates by the end of 2023. Being a safe haven, and often attracts investors' interest in times of uncertainty and slowdown, low rates," said Colin Shah, MD at Kama Jewelry.
Shah went on to add that weak economic data like manufacturing activity and the job market are showing signs of an impending risk of a slowdown in the US economy. These developments will restrict the Fed's ability to tighten rates and liquidity.
Weak US data
"The US JOLTS job opening data which came in below expectations indicated a cooling off labor market in the US and factory orders also declined more than expectations raising hopes the Fed will halt its aggressive rate hike cycle very soon. Besides, the dollar index slipped toward a two-month low, further acting as a tailwind for the precious metals," said market expert Sugandha Sachdeva.
New peak in sight?
Unveiling strategy for gold investors, Sugandha Sachdeva said, "As of now, buying on some declines seems prudent while keeping a close eye on the support of ₹60,200 per 10 gm mark as prices look to edge higher toward $2,050 per ounce or ₹61,700 per 10 gm in the short term. The yellow metal even has its eyes set on the previous highs of $2,075 per ounce mark tested in 2020."
"Silver too was in the limelight as it witnessed strong gains of 3.52 per cent to soar higher close to $25 per ounce. The white metal looks geared up to advance towards ₹76,200 per kg initially and then ₹78,000 per kg mark. A breakout above the crucial level of ₹78,000 per kg is expected to lead it towards ₹85,000 to ₹88,000 per kg zone in the long run," said Sugandha Sachdeva.
Anuj Gupta of IIFL Securities said that gold prices have strong support at ₹59,500 on MCX whereas in international market, it has strong support placed at $2,010 per ounce levels. He went on to add that silver rate today has support placed at $23 per once levels whereas in domestic market, while metal has strong support placed at ₹70,000 per kg levels.
"Both gold and silver are looking positive on chart pattern and we may see both bullions to breach its current high of $2,075 (that gold made in August 2020) and $49.83 per ounce (that silver made in 2011)," Anuj Gupta concluded.
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