Gold futures beat St. forecast in Oct

The dollar scaled a 10-mth peak, while Treasury yields hovering near 16-yr highs, after the US government averted a partial shutdown and economic data supported the prospects of rates staying higher for longer, said Ravinder Kumar, senior research analyst (commodities) at SMC Global Securities Ltd

Defying Correlation Maths

♦ Generally, gold rises when USD weakens

♦ Now, gold rising amid strong Greenback

♦ Geo-political tensions adding to gold demand

♦ Gold futures on MCX rose over 4% in Oct

Hyderabad: Gold futures (10gm) on MCX were trading at Rs60,520 on Wednesday from the year’s low of 56,019 on February 2 and Rs56,721 on October 4 and Rs57,012 on December 30, 2022, as against the prediction of Rs55,800-58,500 range by derivatives commodity analysts. The year-to-date (YTD) highest for Gold futures was Rs62,856 on May 4. In October, gold prices may continue to witness sell side movements and possible range would be 55800-58500. On the other hand, Silver may trade in the range of 62,000-69,000. Gold price generally picks up if US dollar weakens. But this time, despite strong Greenback, the yellow metal price has been soaring thanks to safe haven demand in the wake of geo-political tensions in the Middle East.

Gold prices in the international markets remained well supported at $1,860-1,880 levels (oz), while technical charts indicate price targets at $1,990 and $2,030 levels.

Ravinder Kumar, senior research analyst (commodities) at SMC Global Securities Ltd, said: “In October, gold prices expected to witness sell side movements and possible range would be 55,800-58,500. On the other hand, Silver may trade in the range of 62,000-69,000.”

Rising money market yields resulted in attractive currency yields. Though gold was hovering in sideways trading recently, the price has not broken any key support levels in last three months.

Further, gold supply from the mines as well as of used gold is high and limited price rise.

Central banks have been buying gold recently. An easing monetary policy stance is projected to come into effect in mid-2024 which will help bring an incremental value to the investors taking long positions from now “In September, gold prices fell 4.6per cent on Comex and 3.8 per cent on MCX as the US dollar registered its second consecutive monthly rise and US Treasury yields also posted their fifth consecutive monthly gain. The gold prices also posted second consecutive quarterly decline, as dollar hit a 10-month high against its major peers, while Treasury yields climbed a fresh 16-year peak as investors bet the US economy will outperform its competitors in an environment of high interest rates,” added Kumar.

However, gold prices moving upwards despite strong US dollar. This is mostly because of safe haven demand emerging out of Israel-Hamas war. Gold futures rose over four per cent on MCX.

Comments from Fed officials last week of September month also signalled to the market that the Fed could raise rates further to bring inflation to its two per cent target. On the data front, orders for long-lasting US manufactured goods rose in August, as an increase in machinery and other products offset a drop in civilian aircraft, and business spending on equipment appeared to regain momentum after faltering early in the third quarter.