06 Feb , 2023 By : Monika Singh
Gold prices corrected sharply on Friday as result of the positive U.S. employment report. The strong jobs data stoked fears of continued rate hikes from the US Federal Reserve. However, despite the global fall, April gold futures on the MCX gained in morning trade, adding Rs 400 or 0.7% to trade at Rs 56,980. Concerns regarding the Fed reinstating an aggressive, hawkish policy gave rise to the dollar index and the U.S. 10 year Treasury yields, further denting the appeal of the yellow metal.
“MCX Gold April futures gained on Monday morning after declining sharply on last Thursday and Friday. The dollar index firmed up around 103 on Monday morning after jumping more than 1% in the previous session, as stronger-than-expected US jobs data suggested the Fed has more room to hike interest rates,”
He added, “The US economy added 517K jobs in January, the most since July and much more than market expectations of 185K. Investors now look ahead to Powell’s speech before the Economic Club of Washington on Tuesday to gain clarity on the Fed’s policy plans. Outlook in gold is weak and we may see some pull back still, we recommend a sell on bounce for this week.”
Gold in MCX is trading at 0.7% this morning despite strong sell off witnessed in COMEX. The primary reason is the depreciation of the Indian Rupee. The loss in COMEX is offset by the depreciation of Indian Rupee which opened 0.67% and that is why MCX Gold opened higher,”
“Gold prices slipped from nine month highs and slipped below its important support $1874 per troy ounce but today we are seeing some fresh buying and short covering in international gold. On a domestic level, we have witnessed more rise than international gold due to rupee weakness. Today, the rupee got weaker by 0.63% against dollar and that’s reflected in MCX gold futures which is trading at higher around 0.70% higher.
The safe haven asset witnessed a meteoric surge in its price over 2022, as central banks over the world flocked to the commodity to protect their bottoms lines during excessive global uncertainty. In the short term, the rapid increase in gold prices have pushed the metal into an overbought zone. Traditionally, when gold prices rally extensively, there is a chance of correction; however, this drop was abated as a result of the less-hawkish FOMC commentary.
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