MCX (Multi Commodity Exchange) Gold futures hit lifetime highs on Friday on the intraday (Rs 59,461) and closing basis at Rs 59,420 per 10 gram. The April futures settled up by Rs 1,414 or 2.44% from the Thursday closing price. Meanwhile, May Silver futures rallied over 3% and gained Rs 2,118 per kg to close at Rs 68,649.
The bullish trends in bullion is likely to remain intact over the next week as a spate of banking crises in US and Europe refuse to die down. Yellow metal futures on the MCX are set to breach Rs 60,000 next week, says commodity and currency expert Anuj Gupta while recommending a buy strategy in gold and silver futures.
MCX gold has beaten all other asset classes in terms of returns. It has gained Rs 4,366 or nearly 8% on the year-to-date (YTD) basis while Rs returning Rs 3,628 or 6.51% in March alone.
Buy MCX April gold futures at Rs 59,200 with a stop loss of Rs 58,650 target and price target of Rs 60,200 Gupta said. He is Vice President (VP), Commodity and Currency Research at IIFL Securities.
Silver futures are also up 6% on the month-to-date basis and have shed most of their YTD losses. From negative returns of over 11% this year, they are just 1.31% shy of previous year's closing price, according to Gupta. In value terms, Silver is down by Rs 912 on YTD basis while up by Rs 3,878 MTD.
Buy May Silver futures at Rs 67,000 with a stop loss of Rs 65,500 and price target of Rs 70,000, the IIFL Securities expert said.
"There is a possibility of volatility in the prices of precious metals this week," Nirpendra Yadav, Senior Commodity Research Analyst at Swastika Investmart Ltd said. MCX gold futures have already broken their resistance levels of Rs 59,000 as was suggested by Yadav. Silver is trading near the hurdle of Rs 69,000.
As for the international prices, Gold surged more than 2% on Friday riding on a wave of banking crises, Reuters reported. Bullion witnessed its biggest weekly rise in three years, while bets solidified for a less aggressive Federal Reserve in its fight against inflation, the report further said.
“Spot gold climbed 2.8% to $1,971.95 per ounce by 1:47 p.m. ET (1747 GMT), highest since April 2022. Bullion has added about 5.6% this week, the most since March 2020. U.S. gold futures gained 2.6% to settle at $1,973.50,” the report said.
"Gold is surging on fears that more bad banking news could appear over the weekend and hopes that the Fed will pause its rate hikes next week," the Reuters report further said quoting Tai Wong, an independent metals trader based in New York.
Gupta sees gold to break the $2,000 mark next week with a possibility to hit $2,030. As for Silver, a range between $23 and $24 is seen, this analyst said.
"Gold and silver prices saw strong demand in the last week as the crisis escalated in global banks. Fears of recession and uncertainty over monetary policy have increased the safe-haven appeal of precious metals," Yadav said.
“Due to the banking crisis, investors expect the Fed to keep monetary policy soft. Gold will benefit from any pause in the Fed's rate-hike cycle, demand for gold against the dollar will increase, and the opportunity cost of holding a non-yielding asset will also be low. However, the Fed is likely to remain accommodative on monetary policy as long as inflation remains stable. Investors will keep an eye on the Fed meeting, in which it is unclear how much the interest rate hike will be,” Yadav further said.
Dollar Index (DXY)
IIFL’s Gupta said that the weekly chart reflects a trend line breakdown which points to further weakness. It may fall up to 102-100 against a basket of major currencies, Gupta added. This will augur well for the yellow metal as movement in DXY is inversely related to the movement in price of gold, Gupta explained.
Source: The Economic Times
BDST: 1526 HRS, MAR 19, 2023