Gold and silver gain, analysts recommend that traders take fresh positions
Analysts see positive cues for bullion from the US Fed's refusal to indicate further rate hikes
- Jul 27, 2023,
- Updated Jul 27, 2023 10:02 AM IST
Gold prices opened on the Multi Commodity Exchange (MCX) on Thursday at Rs 59,610 per 10 grams and hit an intraday low of Rs 59,541. In the international market, prices hovered around $1,972.15 per troy ounce. Meanwhile, silver opened at Rs 75,890 per kg and hit an intraday low of Rs 75,800 on the MCX. The price hovered around $24.91 per troy ounce in the international market.
Anuj Gupta, Vice President of IIFL Securities, said, "FOMC increased the interest rate by 0.25 points basis, indicating no further increment in rates. This would be positive for the bullion. In the international market, gold trades at $1974 levels per ounce."
Gupta sees technically strong support at 59200 levels and then 58950 levels, Resistance at 59700 and 60000 levels. Today, one can buy on the rise around 59200-59300 levels with a stop-loss of 58950 and for the target of 59700 to 59800 levels. Gold may test $1985 to $1990 levels in international markets.
Yesterday, gold prices closed on a positive note, rising 0.49% to 59445 levels.
Amit Khare, Associate Vice President at Ganganagar Commodity Limited (GCL), said, "August gold closed at 59461(0.45%) and September silver closed at 75324(0.75%). Bullion's daily charts are now looking strong. Momentum Indicator RSI also indicates the same. Traders are advised to make fresh buy positions in gold and silver near the given support level one with the stop loss of support level two and book near the given resistance levels: Gold August Support 59300/59000 and Resistance 59600/59800. Silver September Support 75000/74400 and Resistance 75700/76000."
Gold prices held near their highest levels in a week after the U.S. Federal Reserve delivered a widely expected interest rate hike, and investors digested balanced comments from Fed Governor Jerome Powell.
Manav Modi, Analyst, Commodity and Currency, MOFSL, said, "The Fed raised interest rates by 25bps, setting the fed fund target rates at 5.25%-5.50% range, and highlighting that another 25-bps hike could be possible at the September meeting based on a wide range of data. Fed Chair Jerome Powell also raised concerns regarding still higher inflation and that the economy still needed to slow and the labour market to weaken for inflation to "credibly" return to the U.S. central bank's 2% target yet were no longer forecasting a U.S. recession. The Fed meeting was in-line with what market participants had discounted for, weighing further on the dollar index."
On the data front, the United States is expected to report that Q2's GDP increased at a 1.8% YoY, while initial claims for unemployment benefits are expected to have increased 7,000 to a seasonally adjusted 235,000 for the week ended July 22.
"Focus also shifts to policy decisions from the European Central Bank and Bank of Japan due this week, with the ECB expected to raise rates for the ninth time," said Modi.
As the Federal Reserve has kept its options going forward open, commodities may not gain much upward traction based on the Fed's decision alone.
Praveen Singh – Associate VP, Fundamental Currencies and Commodities, Sharekhan by BNP Paribas, said, "As expected, the US Federal Reserve raised the Fed fund rate by 25 bps to the 5.25%-5.50% range and kept its options going forward open as it made the future cases depending on incoming data. During his presser, Fed Chair Powell said that inflation has proved to be more resilient than expected. They can move down to a neutral rate, maybe even lower, should the inflation come down quickly. He added that the economy is weathering banking turmoil well. He observed that the job market is strong and labour demand still substantially exceeds supply."
The US Dollar closed with a loss of 0.26% at 101.03 as the two-year yields slid 0.60% at 4.85%.
"Traders will look forward to today's European Central Bank monetary policy decision. The Central Bank is widely expected to hike the key rate by 25 bps; however, the focus will be on future rate hike possibilities. Advance US GDP for Q2 will be crucial for the metal. The Euro may try to rally as the ECB is expected to maintain its hawkish stance, which may support gold; however, gold rally on the US Dollar weakness may be short-lived unless GDP data disappoint," said Singh.
"Fundamentals of gold are not so inspiring presently. Total known ETF gold holdings fell to a fresh cycle low. Safe haven demand is muted. The metal is overvalued with respect to yields. The metal will need a series of underwhelming US data to rally on a sustainable basis," added Singh.
Thus, the FOMC hiked rates by 25 bps taking the fed fund rate to 5.25-5.50% on expected lines. Abhishek Bisen, Head of Fixed Income & Fund Manager at Kotak Mahindra Asset Management Company, said, “In order to ensure financial conditions do not ease prematurely, Federal Reserve continue to guide that further monetary actions will be data dependent. In our assessment falling core inflation in the month ahead will headline inflation at ~ 3% handle, will give comfort to FOMC to stay on hold for rest of CY 2023.”
Gold prices opened on the Multi Commodity Exchange (MCX) on Thursday at Rs 59,610 per 10 grams and hit an intraday low of Rs 59,541. In the international market, prices hovered around $1,972.15 per troy ounce. Meanwhile, silver opened at Rs 75,890 per kg and hit an intraday low of Rs 75,800 on the MCX. The price hovered around $24.91 per troy ounce in the international market.
Anuj Gupta, Vice President of IIFL Securities, said, "FOMC increased the interest rate by 0.25 points basis, indicating no further increment in rates. This would be positive for the bullion. In the international market, gold trades at $1974 levels per ounce."
Gupta sees technically strong support at 59200 levels and then 58950 levels, Resistance at 59700 and 60000 levels. Today, one can buy on the rise around 59200-59300 levels with a stop-loss of 58950 and for the target of 59700 to 59800 levels. Gold may test $1985 to $1990 levels in international markets.
Yesterday, gold prices closed on a positive note, rising 0.49% to 59445 levels.
Amit Khare, Associate Vice President at Ganganagar Commodity Limited (GCL), said, "August gold closed at 59461(0.45%) and September silver closed at 75324(0.75%). Bullion's daily charts are now looking strong. Momentum Indicator RSI also indicates the same. Traders are advised to make fresh buy positions in gold and silver near the given support level one with the stop loss of support level two and book near the given resistance levels: Gold August Support 59300/59000 and Resistance 59600/59800. Silver September Support 75000/74400 and Resistance 75700/76000."
Gold prices held near their highest levels in a week after the U.S. Federal Reserve delivered a widely expected interest rate hike, and investors digested balanced comments from Fed Governor Jerome Powell.
Manav Modi, Analyst, Commodity and Currency, MOFSL, said, "The Fed raised interest rates by 25bps, setting the fed fund target rates at 5.25%-5.50% range, and highlighting that another 25-bps hike could be possible at the September meeting based on a wide range of data. Fed Chair Jerome Powell also raised concerns regarding still higher inflation and that the economy still needed to slow and the labour market to weaken for inflation to "credibly" return to the U.S. central bank's 2% target yet were no longer forecasting a U.S. recession. The Fed meeting was in-line with what market participants had discounted for, weighing further on the dollar index."
On the data front, the United States is expected to report that Q2's GDP increased at a 1.8% YoY, while initial claims for unemployment benefits are expected to have increased 7,000 to a seasonally adjusted 235,000 for the week ended July 22.
"Focus also shifts to policy decisions from the European Central Bank and Bank of Japan due this week, with the ECB expected to raise rates for the ninth time," said Modi.
As the Federal Reserve has kept its options going forward open, commodities may not gain much upward traction based on the Fed's decision alone.
Praveen Singh – Associate VP, Fundamental Currencies and Commodities, Sharekhan by BNP Paribas, said, "As expected, the US Federal Reserve raised the Fed fund rate by 25 bps to the 5.25%-5.50% range and kept its options going forward open as it made the future cases depending on incoming data. During his presser, Fed Chair Powell said that inflation has proved to be more resilient than expected. They can move down to a neutral rate, maybe even lower, should the inflation come down quickly. He added that the economy is weathering banking turmoil well. He observed that the job market is strong and labour demand still substantially exceeds supply."
The US Dollar closed with a loss of 0.26% at 101.03 as the two-year yields slid 0.60% at 4.85%.
"Traders will look forward to today's European Central Bank monetary policy decision. The Central Bank is widely expected to hike the key rate by 25 bps; however, the focus will be on future rate hike possibilities. Advance US GDP for Q2 will be crucial for the metal. The Euro may try to rally as the ECB is expected to maintain its hawkish stance, which may support gold; however, gold rally on the US Dollar weakness may be short-lived unless GDP data disappoint," said Singh.
"Fundamentals of gold are not so inspiring presently. Total known ETF gold holdings fell to a fresh cycle low. Safe haven demand is muted. The metal is overvalued with respect to yields. The metal will need a series of underwhelming US data to rally on a sustainable basis," added Singh.
Thus, the FOMC hiked rates by 25 bps taking the fed fund rate to 5.25-5.50% on expected lines. Abhishek Bisen, Head of Fixed Income & Fund Manager at Kotak Mahindra Asset Management Company, said, “In order to ensure financial conditions do not ease prematurely, Federal Reserve continue to guide that further monetary actions will be data dependent. In our assessment falling core inflation in the month ahead will headline inflation at ~ 3% handle, will give comfort to FOMC to stay on hold for rest of CY 2023.”