Gold prices on MCX, the country’s largest commodity exchange, has hit a new high with the June contract touching ₹61,490 per 10 grams but gave in some of the gains to close at ₹61,366 after firm opening with US Fed hiking interest rate by 0.25 per cent on Wednesday.
The yellow metal prices in spot market also gained ₹602 per 10 grams to ₹61,646 against ₹61,044 logged on Wednesday, as per the Indian Bullion and Jewellers Association data.
Gold on the Comex spot market had touched a high of $2,082 an ounce late Wednesday night.
Signals pause in hikes
The US Federal Open Market Committee meeting on Wednesday raised the Fed fund rates by 25 bps to a range between 5 per cent and 5.25 per cent, the highest since September 2007.
Despite US Fed signalling a pause after 10 consecutive rate hikes, the inflation rate are well above the comfort level. Though US inflation has also fallen from its peak of 9.1 per cent reported last year to 5 per cent and is still far away from its 2 per cent target.
Vaibhav Saraf, Director, Aisshpra Gems & Jewels said retail gold prices touching ₹64,000 per 10 gram right at the onset of the wedding season is not good for sales and will lead to a drop in sales in volume leading to lower stock churn.
Ravindra V Rao, VP-Head Commodity Research, Kotak Securities though US pushed back against any rate cuts, markets are not convinced, as recent turmoil in the banking sector coupled with tightening credit conditions are rising the odds of a hard landing in US and Fed might cut rates during such an event. Swaps are now pricing in 75 basis points of rate cuts by 2023-end, he said.
Gold prices might continue to edge higher amid prospects of a looming US recession, stress in banking sector and debt ceiling uncertainty, Rao added.
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Manav Modi, Analyst, Commodity and Currencies at Motilal Oswal Financial Services said MCX Gold has seen a great start to this year posting a year-to-date return of 10 per cent, marking life time highs.
Metal on domestic front has also received support from rupee depreciation and recent changes in import duty, he said.