Why gold prices today have surged to 9-month high


Gold rates today surged in Indian markets to nine-month highs, tracking firm global cues. On MCX, gold futures rose 0.9% to 49,292 per 10 gram while silver jumped 1% to 66,570 per kg. In global markets, gold rose 0.6% to $1,860.59 per ounce after hot US inflation numbers pushed investors towards the safety of the precious metal. 

Amit Khare, AVP- Research Commodities, Ganganagar Commodity: “Hot inflation numbers from the U.S. and China fueled buying interest in the precious metals markets today, as traders and investors are seeking out hard-asset hedges against rising prices.”

Analysts say gold, which is seen as a hedge against inflation, would be well supported as long as inflation fears continue to dominate sentiment. Data released on Wednesday showed US consumer prices in October rose at their fastest pace in 31 years.

Manoj Dalmia, founder and director-at Proficient Equities Limited, said though gold’s rally has been fuelled by an unexpectedly bigger inflation number in US and subsequent worry of rising interest rate, yet it was in line with the intermediate uptrend. 

“Gold was actually getting stronger once it surpassed the Aug high of 47900 and its primary downtrend had exhausted clearly. From season’s perspective as well, Gold is entering into a bullish phase as the months of December and January are traditionally bullish,” he added. 

Strength in the metal came despite the dollar hitting an over 15-month high, making gold more expensive for holders of other currencies. Reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of gold, which pays no interest.

Recent gains in bullion have been supported by a dovish tone taken by key central banks last week, with the Federal Reserve reiterating its view that inflation was “transitory” and would likely not require a fast rise in rates.

However, several Fed officials this week expressed growing concerns over more long-lasting inflation.

Among other metals, spot silver rose 1.2% to $24.91 per ounce. Platinum gained 1.4% to $1,082.00 per ounce, and palladium rose 1.5% to $2,050.23.

Amit Khare, AVP- Research Commodities, Ganganagar Commodity Limited, however said investors adopt buy-on-dips strategy to enter into gold. “Both gold and silver are continuously rising since past few trading sessions, As per technical chart at current prices both metals are looking risky for fresh buying, Momentum indicator RSI also indicating the same on daily chart, So traders should wait for fresh buying after some correction.” (With Agency Inputs)

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