- ICICI Direct expects gold to likely breach the ₹54,000 level as there has been firmness in the trend. Expectations of a smaller size rate hike by central banks and further slowdown in inflation print have stalled the dollar which makes safe havens like gold one of the preferred picks.
This week, gold prices in 10 grams climbed to their highest level since mid-April. Meanwhile, global spot gold prices also crossed the $1,800 per ounce mark. Last month, gold futures witnessed a sharp rebound due to a better-than-expected slowdown in US inflation and Fed’s less hawkish remarks. For December, ICICI Direct expects gold to likely breach the ₹54,000 level as there has been firmness in the trend. Expectations of a smaller size rate hike by central banks and further slowdown in inflation print have stalled the dollar which makes safe havens like gold one of the preferred picks.
On Friday, at MCX, gold futures maturing on February 3, closed at ₹53,880. While silver futures maturing March 3, skyrocketed by 1.59% or ₹1,041 to close at ₹66,450.
On December 3, as per Good Returns data, 24-carat gold in 10 grams is available at ₹54,100 in the national capital, while the price is at ₹53,950 in the financial hub Mumbai and Kolkata. Meanwhile, in Chennai, the price stood at ₹54,720.
According to the ICICI Direct report, Comex gold futures recorded a steep rebound last month — gaining for the first time in the last seven months. The performance was fuelled by a merrier-than-expected US CPI inflation print which led bulls to take the charge and provided the initial thrust to the gold prices.
The easing in the annual US inflation data below 8% sparked hopes among investors that the US Federal Reserve may reduce the pace of rate hikes going forward.
Further, in November, the yield on the US 10-year treasury note consolidated at around 3.7%. This is after the yield tested the highs of 4.25% in October. The softening in bond yields further supported gold prices.
Also, the price rally got a helping hand from the Fed chair’s comment on scaling back interest rate hikes as soon as December. CME Fed tool watch indicates a 77% probability of a 50 bps rate hike in the December meeting.
Thereby, ICICI Direct’s note said, on the technical front COMEX Gold has taken strong support near $1620 ounce and formed a bullish engulfing pattern in the monthly charts, suggesting firmness in the trend. So in the near term as long as $1620 per ounce holds, the price is expected to rise towards the next key target resistance of $1842 per ounce.
Tracking international prices, the stock brokerage expects MCX Gold to likely trade in the range of ₹52,200 to ₹54,200 in December.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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