Gold prices sharply recovered over the weekend when the US dollar fell following the release of US labour statistics showing slower pay growth. The price of the 10-gram gold futures contract for the month of April 2023 on the Multi Commodities Exchange (MCX) increased by Rs. 829 on Friday, closing at Rs. 56,130. On Friday, the price of gold on the international spot market increased by more than 2% and settled at about USD 1,867 per ounce levels.
Experts in the commodities market claim that gold prices are currently on the rise because slower wage growth in the US has allayed concerns about US inflation, and the market is anticipating a tiny US Fed rate increase as a result. They claimed that the current gold price has immediate support at USD 1,820 per ounce levels and that it is running into obstacles at USD 1,890 per ounce levels.
On MCX, they said that gold price has immediate support put around Rs.55,200 but it is meeting resistance at Rs.56,700 and Rs.57,200 per 10 gm levels. According to them, the overall trend for yellow metal is bullish as the impending pressure on equity assets from Silver Valley Bank's bankruptcy is anticipated.
Speaking on the reason for strong rebound in gold prices, Anuj Gupta, Vice President of Research at IIFL Securities said,"Due to the recent increase in US dollar rates, gold prices have corrected. The market is already replete with rumours that the US Fed official may adopt a small rate walk strategy in the upcoming FOMC meeting slated this month. Nevertheless, the release of US labour data indicating slower wage growth soothed the US inflation concerns. Speculation about a US Fed rate increase in this mode led to selling pressure on the US dollar, which caused the Dollar Index to retrace from its three-month highs."
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