Gold prices exhibited notable fluctuations in recent trading sessions, influenced by a combination of domestic and international factors. On Wednesday, the Multi Commodity Exchange (MCX) reported gold opening at Rs 65,520 per 10 grams, with an intraday low of Rs 65,450. Simultaneously, the global market recorded gold hovering around $2,159.19 per ounce.
In parallel, silver prices on the MCX began at Rs 73,810 per kg, reaching an intraday low of Rs 73,700. Internationally, silver prices were around $24.09 per ounce.
Analysts weighed in on the recent developments in the precious metals market. Anuj Gupta, Chief of Commodity and Currency at HDFC Securities, reported a correction in gold prices of 0.84%, closing at 64481 levels. Gupta noted that gold had recently achieved a new high of 66356 levels. Silver prices experienced a similar correction, declining by 0.89% and closing at 73850 levels.
The primary driver behind the gold price movement was the heightened concern about extended higher interest rates in the United States. This sentiment followed the release of February’s Consumer Price Index (CPI), which indicated a monthly rise of 0.4% and an annual increase of 3.2%, surpassing the forecasted 3.1%.
Manav Modi, an Analyst in Commodity and Currency at MOFSL, commented on the impact of a hot US inflation report, stating that gold prices fell for the first time in nine days. The report dimmed prospects of the Federal Reserve cutting interest rates in the near future.
Looking ahead, market focus is expected to shift to the upcoming Federal Reserve meeting scheduled for next week. Modi highlighted that the market is still pricing in around a 70% chance of a US rate cut by June, according to the CME Fed-Watch tool.
Sachin Kothari, Director at Augmont, provided additional insights into the global factors influencing gold prices. Chinese investors are reportedly hedging against potential economic instability amid a commercial real estate crisis in their country. Lower growth concerns in other global economies have also contributed to supporting gold prices. Kothari mentioned various reasons for the surge in gold prices, including investors hedging against higher-than-expected inflation, realigning portfolios after the stock market boom, and seeking protection from geopolitical instability.
Investor concerns related to ongoing conflicts, such as those between Russia and Ukraine, Israel and Hamas, and anticipation surrounding the upcoming presidential election in November, further contribute to the overall market sentiment.
Ravindra Rao, Head of Commodity Research at Kotak Securities, summarized the impact of the US inflation report on COMEX Gold prices, noting a decline of more than 1% on Tuesday. The report reinforced the Fed’s cautious approach to cutting interest rates, contributing to the observed market dynamics.
In conclusion, the recent volatility in gold prices reflects a complex interplay of economic indicators, global uncertainties, and investor behavior. Market participants are closely monitoring upcoming events, including the Federal Reserve meeting, to gain a clearer understanding of the future trajectory of precious metal prices.
