According to commodity market experts, gold price shot up on the weekend as the latest reading on US inflation showed a fresh 41-year high. They said that spot gold price has given fresh breakout at $1865 per ounce levels and now it is poised to go up to $1900 levels. They expected positive trend for MCX gold price and predicted ₹52,200 to ₹52,600 levels in near term. Experts went on to add that the bullion metal has strong immediate support placed at ₹50,500 while key support lies at ₹48,800 per 10 gm.

Speaking on the reason for gold price rally on weekend, Sugandha Sachdeva, Vice President — Commodity & Currency Research at Religare Broking Ltd said, “Gold prices were listless throughout the week, while hovering in a narrow band but managed to post strong gains towards the close of the week. Investors remained on the sidelines as they were eyeing several economic variables, be it monetary policy, inflation figures, or the GDP data from the major economies. The dollar nudged higher again after the recent dip, which kept gold prices under check. On the other hand, the ECB laid the groundwork to start its rate hike campaign next month after almost a decade and will also end its asset purchases next month to rein in inflation. The inflation in the Euro Zone has surged to 8.1% YoY, the highest level on record. Moreover, the latest reading on US inflation showed a fresh 41-year high, as it grew by 8.6% YoY in May which has rekindled fears of heated inflation and strengthened the case for aggressive policy tightening by the US Fed. Meanwhile, the RBI also hiked the repo rate by 50bps, and the Bank of Australia announced a 50bps hike in the cash rate this week.”

The Religare experts went on to add that the central banks across the globe are following a monetary tightening path as soaring inflation remains a key concern globally, but this has also flagged concerns about a slowdown in global growth. Energy prices remained buoyant amid Europe’s decision to phase out Russian supplies, along with strong demand and physical tightness of crude and refined products globally, contributing to inflation worries. So considering the diverse variables, even as the rate hike trajectory is negative for gold, scorching inflation and slowdown worries are likely to support safe-haven buying in gold prices from a near to medium-term perspective.

Expecting aggressive rate hike regime in near term, Pritam Patnaik, Head of Commodities — HNI and NRI Acquisitions at Axis Securities said, “US inflation rose more than expected again in May 2022, dashing hopes that the rise in the inflationary trend was plateauing off. The CPI rate rose by 1.0 per cent from April, taking the headline inflation to a new 40-year high of 8.6 per cent. The market expectation was around 8.3 per cent, with a monthly gain of only 0.7 per cent. This could pave the way for aggressive rate hikes by the US fed going forward.”

On gold price outlook, Anuj Gupta, Vice President — Research at IIFL Securities said, “Gold price in spot market has given fresh breakout at $1865 per ounce levels on closing basis. Now, the precious metal price is expected to go up to $1900 levels in near term as US inflation has surged to record 41-year high. Now, gold price outlook for short term seems positive and we are recommending buy on dips strategy to gold investors across globe.”

Echoing with Anuj Gupta’s views, Sugandha Sachdeva of Religare Broking said, “As for the coming week, the trend is likely to remain positive as prices have managed to surpass the barrier of ₹51,500 per 10 gm level, which has opened the doors for a fresh advance towards ₹52,200 to ₹52,600 per 10 gm levels. We advise buying on dips in gold while keeping an eye on the near term support of ₹50,500 per 10 gm mark, while key support rests at ₹48,800 per 10 gm mark.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.