After US labour data showed that wage growth was slowing, the US dollar got weaker, and gold prices went up sharply over the weekend. Gold futures for April 2023 on the Multi Commodity Exchange (MCX) went up by 829 per 10 gm and ended the day at 56,130 per 10 gm. On Friday, the price of gold on the international spot market went up by more than 2% and ended up around $1,867 per ounce.
Experts in the commodity market say that gold prices are going up today because US labour market data showing slower wage growth has eased worries about inflation in the US. As a result, the market is expecting the US Fed to raise interest rates by a small amount. They said that the price of gold today has immediate support at $1,820 per ounce and that it runs into problems at $1,890 per ounce. On the MCX, they said that the gold price has immediate support at 55,200 and resistance at 56,700 and 57,200 per 10 gm. They said that the overall trend for gold is up because the news that Silver Valley Bank is going bankrupt is likely to put pressure on equity assets in the short term.
US dollar rate
Anuj Gupta, Vice President of Research at IIFL Securities, said this about why gold prices have gone up so much: “Recently, the price of gold went down because the value of the US dollar went up. But when US employment data showed that wage growth was slowing, it eased worries about inflation. Now, the market is full of rumours that US Fed officials may only raise rates slowly at the FOMC meeting this month.
This small rumour about a US Fed rate hike led to selling pressure in the US dollar, which pulled the Dollar Index down from its 3-month highs.” Friday, the US Dollar Index fell 0.65% and ended at 104.625 levels.
Sugandha Sachdeva, a market expert, said this about the main things that helped the price of gold move in the last few months: “The most important economic data of the week showed that the US economy added 311,000 jobs, which was more than the expected 205,000 jobs. However, the unemployment rate went up to 3.6% from a historically low 3.4% last month, and wage growth slowed down.
This has made it less likely that the Fed will raise interest rates by 50 basis points at its March meeting. This was a big reason why gold prices went up so quickly.” Sugandha went on to say that investors are flocking to gold as a way to spread out their portfolios because stocks are so volatile.
Crisis at a bank in Silicon Valley
Nirpendra Yadav, a Senior Commodity Research Analyst at Swastika Investmart, said this about why gold prices went through the roof on Black Friday: “The price of precious yellow metal has gone up because of a combination of an 8% drop in the value of the cryptocurrency Bitcoin and a rise in the number of US unemployment claims and the unemployment rate. When people heard that Silicon Valley Bank was going bankrupt, they sold stocks, which helped keep precious metals at lower prices.”
The future price of gold
When Sugandha Sachdeva was asked what the near-term price of gold would be, he said, “For the next week, it looks like the precious metal will aim for around 56,700 per 10 gm or $1,890 per ounce, while support will be at 55,200 per 10 gm or $1,820 per ounce. Now, attention will turn to the next reading of the US Consumer Price Index, which will set expectations for the next rate hike and give more information about where gold prices are going in the near future.”