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Gold prices set for biggest weekly drop since December
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
On Friday (April 26), the yellow metal inched 0.1% higher to $2,334.57 per ounce, while US gold futures rose 0.2% to $2,346.70.
Gold prices are set for their largest weekly decline since December in the global markets, according to news agency Reuters. On Friday (April 26), the yellow metal inched 0.1% higher to $2,334.57 per ounce, while US gold futures rose 0.2% to $2,346.70.
For the week, gold prices are down 2.3%, marking their most substantial weekly drop since early December.
The easing of tensions in the Middle East has played a significant role in this decline.
Concerns over a potential escalation in the region had previously supported gold prices to an all-time high of $2,431.29 on April 12.
However, as fears subsided, gold prices retreated, shedding nearly $100 from their peak, as per Reuters.
Indian market dynamics
In India, the yellow metal’s prices are up by 5% so far this month.
This follows an 8% gain recorded in March.
The current stability in prices is influenced by various factors, including expectations surrounding interest rate cuts.
Recent US economic data releases have presented a mixed bag, with slowing growth juxtaposed against persistent inflationary pressures.
This has left analysts and investors grappling with uncertainty regarding the Federal Reserve’s monetary policy stance.
Experts insight
Rahul Kalantri, VP of Commodities at Mehta Equities Ltd, highlights the concept of “stagflation” as a key concern among economists.
This phenomenon, characterised by stagnant economic growth coupled with high inflation, has driven US bond yields to a five-year high.
Consequently, the appeal of non-yielding assets like gold has been somewhat dampened.
Anuj Gupta of HDFC Securities suggests that gold faces resistance at the ₹71,500 level in the Indian market.
However, a breach of this barrier could pave the way for further gains, potentially touching ₹72,000 per 10 grams.
Gupta advises investors to maintain a stop loss at ₹71,000 per 10 grams, with a near-term target of ₹72,000 per 10 grams.
Conclusion: To buy or not to buy?
The decision to invest in gold hinges on various factors, including individual risk tolerance, portfolio diversification goals, and macroeconomic outlook.
While recent price movements may give pause, gold’s status as a hedge against volatility cannot be overlooked.
Investors should exercise caution and conduct thorough research before making any investment decisions.
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