Gold rates rise on nine-week in a row. Should you buy amid looming Covid fear?

According to commodity experts, gold price rally can be attributed to three main reasons — Covid-19 concern, US Fed indicating a slower pace of interest rate hike and ease in dollar index. They said that gold price has support placed at $1,780 in international market whereas in domestic market, the precious yellow metal has immediate support placed at ₹54,300 to ₹54,400 per 10 gm levels. However, they said that overall bias for gold rates are positive and any dip in the precious bullion metal should be seen as buying opportunity as spot gold price may go up to $1,865 and $1,890 levels once it sustains above $1,820 levels. On MCX, they said that gold prices may go up to ₹55,900 levels in near term. However, they advised investors to refrain from chasing the gold price rally and maintain ‘buy on dips’ strategy.

Speaking on the reasons for continuous gold price rally, Anuj Gupta, Vice President — Research at IIFL Securities said, “Gold price rally for eighth successive week can be attribute to rising Covid-19 concern in India and overseas, US Fed dropping a hint about going slow on the interest rate hike and ease in dollar index. These factors are expected to exist in near term and hence outlook for gold is bullish in near term and one should maintain buy on dips strategy rather chasing the gold price rally.”

The IIFL Securities expert maintained that MCX gold rates have immediate support placed at around ₹54,300 to ₹54,200 levels whereas major support in near term is placed at ₹53,700 levels. On the upper side, yellow metal is facing hurdle at ₹55,500 and ₹55,900 levels. However, he expected the bullion metal price to breach both these hurdles in near term as rising Covid-19 fear is expected to fule demand for gold in near future.

Nirpendra Yadav, Senior Commodity Research Analyst at Swastika Investmart said, “In India, gold and silver prices have registered a good gain in 2022, while the prices of gold and silver have seen a marginal increase in Comex futures due to the continuous interest rate hike by the US Fed and the other major central banks that participated in hawkish monetary policy with the Fed. Rate hikes have cooled inflation somewhat, but gold and silver prices have risen after the Fed indicated a slower pace of rate hikes. For the New Year, the concern over COVID-19 and the fear of an economic slowdown could be the trigger for precious metals prices.”

The Swastika Investmart expert said that in the coming weeks, a decline in the dollar, which moves in the opposite direction of gold, may help to support the precious metals uptrend. In the year 2022, there was a massive selloff in cryptocurrency, and Bitcoin, which was seen as an alternative to gold, fell by 76 percent from its peak, resulting in investors’ continued trust in gold. Interest rates have been raised by the Fed more than expected, and more interest rate hikes can adversely affect the global economy.

Gold price outlook for long term

Speaking on gold price outlook for 2023, market expert Sugandha Sachdeva said, “The overall price structure for gold depicts a positive undertone as we step into 2023. After witnessing significant volatility, prices have formed a base at $1,615 per ounce, where a decisive move above $1,970 per ounce in international markets can lead to an upside move towards $2,070 per ounce initially and then towards new highs of around $2,290 per ounce. As for the domestic markets, a convincing move past the ₹55,600 per 10 gm mark can direct prices higher toward ₹60,000 per 10 gm in the domestic markets.”

Sugandha Sachdeva went on to add that strong resting points for the precious metal are pegged at the $1,700 per ounce mark and $1,615 per ounce, while in domestic markets corresponding support areas are seen at ₹52,200 per 10 gm and ₹49,500 per 10 gm mark. She also stressed that one should however refrain from chasing the momentum, and rather look for healthy dips for accumulating the yellow metal in a phased manner.

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.