Gold Rate Today: Gold prices trade on a tepid note amid firm US dollar

While gold rates have seen a bullish trend in the last eight weeks, in the early hours of trade Wednesday, the prices on were largely unchanged.

After touching Rs 55,899 per 10 grams on MCX in opening deals, gold prices saw a marginal drop of 0.18% amid strength in the US dollar index and treasury yields.

Gold prices hit a six-month high on Tuesday in international markets, as the dollar weakened and US yields remained steady, due in part to China’s decision to ease Covid-19 restrictions. This led to higher demand expectations in the region and boosted gold prices, despite rising yields.

Spot gold rose 1.1% to $1,816.69 per ounce and reached as high as $1,832.99 earlier in the day, its highest level since June 27. US gold futures also increased by 1.1% to $1,823.1.

Several factors have contributed to the current trend in gold prices, including a subdued movement in the dollar index, which is currently trading near six-month lows, and a spike in Covid cases globally, raising concerns about an economic slowdown.

The US economy also expanded at an annual pace of 3.2% during the third quarter, better than the previously expected 2.9% rate, but this has led to concerns that the US Federal Reserve will keep pushing interest rates higher for longer in its efforts to combat inflation.
Tight monetary policy from central banks such as the Bank of Japan, the European Central Bank, and the US Fed has also raised uncertainty about the potential impact on global growth.

Trading Strategy

Analysts expect that the volume in gold prices will remain muted and the metal will trade in a “sideways to positive” range in the near term, with spot gold prices remaining in the $1,780 to $1,820 range and domestic gold rates trading in the ?54,000 to ?55,000 range.

They advise investors to adopt a “buy on dips” strategy in the short term and warn traders against taking short positions in gold, as the metal may become a “haven” for investors if Covid cases continue to rise.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)