Gold Price Forecast Today: Gold gains ahead of the ECB meeting policy today where a 75bps rate hike is expected. Dollar index rally was overstretched and yesterday we saw some pullback in the safe haven currency and US 10 yr Treasury yield. This helped in all asset classes gaining some momentum on the upside including gold.
The rally in gold might be short lived as the majority of the rally was because of weakness in USD and there weren’t many long positions that got added in open interest. With Sept 20-21 rate hike from Fed near the corner, USD is expected to remain strong making gold vulnerable at the top. Today’s rally is expected to extend as EUR is expected to gain after rate hike from ECB. Resistance in MCX is at 50,950 while support is at 50,250.
Gold and silver bounced helped by the dollar’s slight retreat from a two-decade high and as bargain hunters took advantage of recent losses. The Dollar Index continued to hover around its two decade high although, slight pullback from the peak late in the session seemed to offer some respite for gold and silver prices. The U.S. services industry picked up last month, providing ammunition to the U.S. Federal Reserve to deliver another 75-basis-point rate hike capping gains for gold on the higher side. Comments from the Fed Vice chair showed inflation and growth concerns in the speech.
Fed Vice Chair Lael Brainard reaffirmed that Fed would take necessary action to calm Inflationary pressure, while also noting the risks of going too far, Fed should be careful to avoid overtightening. Apart from U.S. initial weekly jobless claims, focus will be on ECB policy meeting and Governor Powell’s speech later in the day.
Gold prices got some much-needed respite as the dollar index lost some of its steam. The USD came off its 20-year highs as the markets prepare to take in ECB’s rate hike decision. The central bank is expected to turn interest rates positive for the first time in 11 years with a 50-basis point hike, as it struggles to combat runaway inflation. Expectations of higher rates from the ECB have bolstered the Euro against the USD, leading to a small relief rally in gold. The sustainability of the same is limited, as the impending Fed rate decision is bound to come back to focus. The market expects gold to trade in a range between $1,740 to $1,692. A sustained move above or below this range could signal a more definitive trend. Sell on the rise is the recommended strategy.
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