In international markets, gold prices saw a rocky week and fell to a 10-month low, only to make up some of the lost territory by the week’s end.
A dramatic drop in gold prices was caused by the Fed’s tightening cycle amid high inflation readings and the sudden surge of the dollar index to new 20-year highs. Gold’s price on the Multi Commodity Exchange (MCX) dropped from 51,950 to 50m810 per 10 gm level, losing 2.20 percent over the previous week.
Experts claim that amid constant talk of interest rate increases by important central banks, gold investors preferred the safe-haven dollar to gold, which is why it broke through the critical resistance level of 105.80 to advance higher towards the 107.78 level.
They claimed that the dollar index, US inflation data, the US Fed’s statement, and other variables are anticipated to continue controlling the direction of the gold price in the foreseeable future. “May saw an unexpected increase in US inflation, shattering hopes that the inflationary trend was plateauing.
The CPI rate increased by 1% from April, bringing the headline inflation rate to 8.6%, a new 40-year high. The monthly gain was only 0.7%, falling short of the market projection of 8.3%. This might open the door for future aggressive rate increases by the US Fed.
As a result, gold prices would decline until the next Fed meeting and commentary “said Pritam Patnaik, head of commodities for Axis Securities’ HNI and NRI Acquisitions. Here are the top 5 variables that could affect gold prices this week:
(1) The dollar index “The fluctuation of the dollar index would be the first and most important dominant factor. Following a sharp increase last week, the safe-haven currency’s upward momentum would put more pressure on gold prices, while a pause in the rally would act as a catalyst for gold prices to rise .
“according to Sugandha Sachdeva, Vice President of Commodities & Currency Research at Religare Broking Ltd. 2] Cost of crude oil “The flow of crude oil will continue to be important as the US and its allies consider a plan to control the price of Russian oil between $40 and $60 per barrel.
Next week, US Treasury Secretary Janet Yellen will visit the Indo-Pacific area to solicit support for a cap on the cost of Russian oil “announced Religare Broking’s Sugandha Sachdeva. 3] Report on US inflation:
“The US’s June 2022 inflation data is anticipated the following week, and it will have an effect on the entire asset class, including gold.
A negative data point is anticipated to cause profit-booking in the US dollar, which will cause gold and other assets to surge sharply around the world. Therefore, one must monitor incoming US inflation data, “the vice president of research at IIFL Securities, Anuj Gupta, remarked.