However, strong US employment data, a rallying dollar and strength in bond yields hurt bullion’s appeal. Traders are also awaiting inflation figures from the world’s largest economy.
Hareesh V, Product Manager,
said geopolitical concerns and weak economic activity across the world are the main reasons that have pushed gold prices higher.
He added that the inflation numbers would decide the Federal Reserve’s future course of action in terms of rate hikes to curb inflation amid the ongoing economic downturn.
Gold is considered an inflation hedge, but tends to lose its appeal when currency and bond yields rise, as bullion does not earn anything on its own.
Renisha Chainani, Head of Research at Augmont Gold, said: “The collapse in US trading activity is the main catalyst to support bullion. The contraction of US GDP for the second consecutive quarter increases the likelihood of a hard landing.
Prithviraj Kothari, managing director of RiddhiSiddhi Bullions, said gold prices have accelerated their recovery in recent days, rising sharply. “Gold is supported by a weaker US dollar, lower bond rates following the Fed’s latest decision.”
Market experts are positive about the yellow metal in the short term, as they see more upside for gold in the short term. Even in the long run, gold seems like a decent bet and one should hoard the declining precious metal, they added.
Augmont Gold’s Chainani said if gold holds above Rs 51,500, it could hit Rs 53,000 this month, while Kothari said gold would need to be accumulated via SIP to a target of Rs 55,000 by the end of the year.
The recovery of the rupee and the increase in import taxes have supported gold prices in India, market analysts said.
“In the short term, gold prices are likely to remain range bound,” Geojit’s Hareesh V said. “Over the long term, the yellow metal has the potential to generate strong returns. »
(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
