NEW DELHI: Gold and silver futures started Wednesday’s session on a strong note ahead of key inflation data from India and the US and Federal Reserve policy minutes.
The June gold futures rose Rs 260 or 0.43% per 10 grams to Rs 60,765 while May Silver futures were trading at Rs 75,677 per kg, up by Rs 637 or 0.85%.
In the international market, gold retraced levels of $2,000 per troy ounce on Tuesday on the back of a milder US dollar. Gold was trading at $2,030.20 on Comex on Wednesday, up $11.20 or 0.55%.
Street will be keenly tracking the US inflation data to be released later today. Any increase could unsettle the apple cart and force the Federal Reserve to stay on the monetary tightening course. To its disappointment, the world’s largest economy reported better than estimated pay-roll numbers, last week.
“Spot gold is currently trading 0.60% higher at $2015 on the Federal Reserve speakers sounding restrained and somewhat less hawkish than usual in the recent past on monetary policy. The speakers seem to convey the idea that the Federal Reserve may pause after a 25 bps hike in May as rates will become sufficiently restrictive and inflation may come down sharply by the end of this year. Wider markets remain bid on Fed optimism, though ten-year yields are flattish around 3.43% and the Dollar Index is steady at 101.82,” Praveen Singh – Assistant Vice President, Fundamental currencies and Commodities analyst at Sharekhan by BNP Paribas said.
“Gold may trade with a positive bias as the bulls eye $2032 resistance. Next resistance will come at $2050. Support is seen at $2000/$1975-$1980,” Singh said.
Gold prices have rebounded after a near 2% correction from all-time highs of Rs 61,181 per 10 grams.The year-to-date (YTD) gains for the yellow metal as on April 11, Tuesday, stand at 10.11% or Rs 5,556 while the month-to-date gains (MTD) are at 1.95% or Rs 1,157. As for silver futures, the YTD gains are at 8.20% or Rs 5,690 while the MTD gains at 3.95% or Rs 2,855, said Anuj Gupta, Vice President (VP), Commodity and Currency Research at IIFL Securities.
He recommends a buy-on-dips strategy.
- Dollar Index: Movement of dollar is inversely related to the price movement in bullion. A weaker greenback makes dollar-priced commodities more appealing to holders of other currencies.
- US CPI data: Market participants look forward to today’s US CPI data for March. The inflation readings are likely to show a downtrend in inflation extending.
- FOMC minutes: Tonight, FOMC minutes for the FOMC meet held in March will be released. The minutes may show the Central Bank being more concerned with inflation rather than banking crisis, according to brokerage Sharekhan.
Intraday Trading Strategy by Anuj Gupta
While spelling out the day’s trading strategy, Gupta advised investors with a near-term view to remain on the buying side. Correction is an opportunity to invest in bullion, he said. He sees gold prices hitting the Rs 62,000 mark in April.
- Buy MCX June Gold futures at Rs 60,500 with a stop loss of Rs 60,200 and price target of Rs 60,850.
- Buy MCX May Silver futures at Rs 74,000 with a stop loss of Rs 73,400 and price target of Rs 76,000.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)