‘Gold prices on the upward trend, to touch Rs 60,000/10 gms soon’

According to Emkay Global, a major reason for the rally in the prices of gold has been the cues from the US Fed. After a relentless tightening on the rate as well as liquidity front, the central bank has indicated a slowdown in the pace of rate hikes as key economic indicators, and inflation has stabilised.

A slower rate hike of 25 bps going forward has softened the US dollar, leading to a rally in gold prices. Gold is an international commodity, priced in US dollars – so a softness in the greenback lifts the prices of the yellow metal. The US dollar index, from its high of 114 level witnessed in September, has softened to 103 levels.

Gold is considered a safe haven and often attracts investments in times of uncertainty and slowdown, recession in the economy.

In addition, institutional buyers like the central banks bought a net 50 tons of gold in November, up 47 per cent month-on-month, Emkay Global said.

“This led to a rise in demand for the yellow metal, perhaps this offset the selling by ETFs. A consistent rise in yields and expectations of Fed rate hikes will keep gold prices in focus. Policy changes, if any, will be at least two quarters away given the persistence of inflation as also target levels being quite far away from the current inflation reading. Gold is poised to move up with the right indications in interest rates, especially US rates,” Emkay Global added.

IANS