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Gold prices India: Gold prices may touch Rs 62,000 per 10 gm soon

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Gold prices, which had softened over the last few weeks, may again shoot up and touch Rs 62,000 per 10 gm according to jewellers and fund managers. The movement of the yellow metal will largely be guided by the economic data in the West, and the magnitude of the recession in the US.

Ghazal Jain, Fund Manager of Quantum AMC said “The American central bank raised interest rates to a 22-year high yesterday. But despite this seemingly hawkish move, gold markets are looking firm given that this move was largely priced in and secondly, this meeting is being perceived as slightly less hawkish than the one in June where Chairman Powell alluded to two more rate hikes in 2023. This is evident from interest rate futures which post the FOMC meeting continue to see rates peaking at this level.”

Unlike last time, the Fed did not give much forward guidance on the monetary policy path. It seems the softer US inflation readings for June positively weighed on their decision. Powell used the words “data dependent” when asked about the September policy. Further easing in the monthly core inflation numbers for July and August could very well make this the last rate hike in this tightening cycle. On the other hand, any negative surprises on the inflation front could mean more rate hikes.

“Powell again ruled out any rate cuts in 2023 which capped the upside in gold. With policy set to be restrictive for the foreseeable future, we can expect gold prices to largely remain range bound. Despite the “higher for longer” rhetoric, a sustainable drop in inflation along with a slowdown in US growth should lead the Fed to cut rates in the first half of 2024. A rate cut will result in a structural up move in gold prices,” Jain said.

Mr. Colin Shah, managing director of Kama Jewelry added “The US Fed hiking rates by 25 bps were on expected lines, the street is expecting one more hike from here on. As inflation is showing signs of control an impending fear of recession will limit Fed’s ability to hike rates further. We may expect an easing of policy rates by next year. The expectation of policy easing has led to a fall in the dollar index and thereby strength to the yellow metal. The rally in the past couple of days is expected to continue albeit at a slower pace.”

“Globally, the prices are expected to touch the $2000/oz level. Domestically, the rate may touch its previous high of over 62,000/10gm. The movement of the yellow metal will largely be guided by the economic data in the West, and the magnitude of the recession in the US,” Shah added.

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