Gold Price Hovers Over 66,000 Mark, Will It Cross 70K Level This Year?

Following the recent CPI data, which came in stronger than anticipated, the price of yellow metal in India has surpassed the 66k level. The current price of gold in India is Rs 6,633 per gram for 24-karat gold (also known as 999 gold) and Rs 6,080 per gram for 22-carat gold. For 22k of gold the price in India today is Rs 60,800 for 10 grams which remains flat compared to yesterday's price whereas 10 grams of 24k gold is now standing at Rs 66,330 level. For Indian customers the price of 10 grams of 18k of gold today is Rs 49,740.

On Wednesday, March 20, during the morning session, gold futures saw little volatility ahead of the US Fed's policy decision and Fed Chair Jerome Powell's press conference on interest rate decision which is likely to remain unchanged. MCX Gold for April 5 delivery traded 0.03 per cent up at Rs 65,602 per 10 grams around 15:22 pm.

The dollar appreciated a day before, which caused the price of gold to show a slight drop ahead of the Fed interest rate policy meeting of 2 days. On the global market front, the US 10Y Yield maintained to hover around 4.3%, which was weighing on the price of gold, while the dollar index surged to a two-week high ahead of the FOMC meet following two sessions that saw substantial gains.

In response to the possibility of high inflation, gold fell by nearly 1% last week following the announcement of the U.S. CPI and PPI for February, which were stronger than anticipated. However, investors' attention is now focused on the UK CPI, which could lead to a consolidation of gold prices, which have recently reached all-time highs due to a weak macroeconomic environment, geopolitical risk, and central banks purchasing gold.

Will The Gold Price Cross 70K Level This Year?

Tapan Patel, Fund manager - commodities, Tata Asset Management, said "Gold prices have rallied recently hitting all-time highs from weak macro-economic environment, geopolitical risk and central banks gold buying. We believe gold prices to remain elevated over the medium term on supportive fundamentals. The major supportive factor may come as change in US Federal Open Market Committee stance where Federal Reserve may pivot from rate hiking cycle. Gold and interest rates generally have a negative co-relation and gold prices tend to perform well in low interest rates scenario. The sluggish US data is indicating soft landing of US economy which is an additional supportive factor for gold."

"Global central banks demand for gold has remained higher in last two years with a record buying of 1081.9 tonnes in 2022 and 1037.4 tonnes in 2023(World Gold Council). Global central banks may continue to add to their gold reserves which may keep gold prices firm. We may see a recovery in global gold ETF demand which was seen absent in the previous year. The investors may switch to gold investment with existing geopolitical risk factors leading to market uncertainty, weaker dollar, and lower interest rates. New investors may look for optimum asset allocation in gold in supportive market environment. Investors may choose from a range of investment products in gold as per their investment goal and return expectations," Tapan Patel further added.

Mr. Colin Shah, MD, Kama Jewelry said, "With gold touching a newer high right in the first quarter of 2024, there is a strong indication of the yellow metal breaching the INR 70,000 mark. The major propeller of this price trend continues to be the global political unrest, and global uncertainty, along with the speculation of a possible US Fed rate cut in May, thus fostering demand for the yellow metal. Back in the country, this rise in gold rates will have a temporary impact on the demand. However, with the strong appetite of the Indian consumer market when it comes to gold, the economic shocks of the global scenario will ripple down in the domestic market, however will be absorbed. Going forward, the consumer market of gold has remained buoyant irrespective of such global headwinds and will continue to do so."

What technical chart suggests for the Gold price?

"Gold prices are taking a breath around $2160 (~Rs 65600) now after touching record highs of $2200 (~Rs 66300) in the first week of March 2024 on the rising expectations of three rate cuts by the FED in 2024. It is anticipated by the market that the FED will begin lowering key borrowing rates at its policy meeting in June. Some investors are trying to hedge against the possibility of higher-than-expected inflation, realign their portfolios after the stock market boom, and protect themselves from geopolitical instability," said Mr. Sachin Kothari, Director at Augmont Gold for All.

"Concerns about wars between Russia - Ukraine and Israel - Hamas, as well as the upcoming US presidential election in November, are among the concerns that are supporting prices. Overall, the technical chart looks bullish and Gold should be on its way towards significantly higher prices around $2300-$2350 (Rs 69000-Rs 70000) in the year 2024," Sachin Kothari further added.

Key support and resistance levels of Gold today

According to Amit Khare Associate Vice President at Ganganagar Commodity Limited (GCL) Broking, MCX Gold and Silver gave a negative closing yesterday, April Gold closed at 65583(-0.04%) and May Silver closed at 75287(-0.27%), As per daily chart Bullions are now looking positive, Momentum Indicator RSI also indicating the same, below are the important levels for the day:

Gold April Support 65400/65200 and Resistance 65700/66000.

Silver May Support 75000/74400 and Resistance 76000/76500.

How gold can be a key investment option ahead and a protective asset against market instability?

"In the Indian market, gold is currently priced at around ₹66,000 for every 10 grams, and some experts believe it could reach Rs 70,000 by the end of this year. This potential increase largely depends on uncertainties in the global economy and expected changes in US monetary policy, specifically potential cuts in US interest rates. Such cuts could make gold, often seen as a secure investment during turbulent times, even more attractive, pushing its demand and price higher. Conversely, a stronger US dollar or positive economic news might cool off this bullish trend for gold by making other investments look more appealing. This situation highlights how global economic factors and investor sentiment play a crucial role in determining gold's price, showcasing its importance as both a key investment option and a protective asset against market instability," said Suman Bannerjee, CIO, Hedonova.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.