MCX Gold Tips For Next Week: We saw a sharp fall from $1,840 to $1,817 yesterday after news of Russian officials and Ukraine officials meeting flashed. However gold reversed those losses and gained till $1,857.
Another reason for gold gaining despite US Fed raising rates is fear of recession. Powell wants to choke off some demand issues to bring down inflation, but he doesn’t want to push the economy into a recession. We have already seen signs of slowdown in many economies. If The Fed doesn’t raise interest rates fast enough, then inflation will continue to rise and if they move too fast, they risk a recession. Both of these scenarios are positive for gold. So we don’t see major corrections in gold. We believe if $1,800 is breached, gold will take support around $1,750 while above $1,860, gold has room till $1,900.Fed Forecast for July Month: Powell revives Expectations for a 50 bps hike
The only negative trigger for gold would be if there is truce between Russia and Ukraine or if real interest rate rises above 2%. Although the Federal Reserve’s aggressive monetary policy stance will start to drive real yields higher, real interest rates wouldn’t be high enough to offer investors significant protection from rising volatility and economic uncertainty. But if the real interest rate rises above 2%, then gold will be unattractive to investors and we may see a sell off in gold.
In MCX Gold has support key 49,750-49,550 and has become short term support. 52,000 is the resistance. The main trigger for gold this week already is over and gold has come unscathed from it. Now we may see gold trade higher albeit with a slow pace. Above 52000 and $1,858 is the breakout for gold. We would recommend investors to buy on dips with stoploss of 49,100 and upside target of 52,000-52,500.