Written by Pritam Patnaik
Gold prices remained stable on Friday, posting their first weekly profit since mid-April 2022. A recessionary dollar index and a potential recession from the 105 levels of the last two decades, which have led to a slowdown in growth in the United States and Europe, have helped revive demand for safe haven. Prices this week saw a sub-level of $ 1790 and a high of 48 1848. This adds to the instability seen in gold and the lack of a clear directional trend. Broadly, the precious metal has been volatile for two broad reasons, such as the dollar index and global growth concerns.
The prospect of a recession is fast becoming a reality, led by flag-bearing economies in the United States and the EU. The aggressively aggressive stance adopted by the US FED only further frightens fans into the system. A high-interest rate regime during periods of low growth is a recipe for stagnation-led recession. As the Fed clarifies its intention to raise 0.50% in its next two sessions, gold prices could witness some headaches. The one-way fall in the dollar index has given gold some relief. The question is, will it survive? We witnessed some bargaining when the precious metals fell below the $ 1800 level, in addition, gold-backed SPDR fund holdings remained in growth mode, with only membership growth. It shows the determination of the golden bulls.
That said, gold traders could witness further declines and should benefit from the latest cautious optimism of the US dollar index. Against the backdrop of a well-supported USD and a central bank-inspired rise in global yields, many gold bears will be eyeing last week’s lows in the mid-1780s.
If 200-DMA, now supported at 8 1,838, if given again, the next level would be $ 1,825. If $ 1800 is violated, we can see the level of $ 1,798. An uptrend beyond $ 1,862 could push the price towards 90 1890. Gold bulls have to be patient to wait and buy drowning.
(Pritam Patnaik – Head – Commodities and HNI and NRI Acquisitions, Axis Securities. Opinions are the author’s own.)