Gold prices remain highly volatile today; short and long-term outlook remains positive

Gold prices in Friday’s trade (April 19) swung between gains and losses amid escalating geo-political rift between Iran and Iraq. On the MCX, while gold June futures contract started on a positive note, at around 10:57 am, it drifted in the red and traded with a cut of 0.01 per cent at Rs 72,674 per 10 gm.

Hareesh V-Commodities Head, Geojit held that traders are looking for fresh cues on both the economic data as well as insights on the geo-political front that could likely propel gold further higher going ahead. The expert sees no probable impact of the likely delay in the Federal Reserve’s  first rate cut on gold.

Internationally, meanwhile, gold prices climbed owing to safe-haven appeal of the precious metal amid the ongoing Middle East turbulence. Spot gold added 0.8% to $2,379.98 an ounce.

Gold climbed as the safe-haven metal benefited from ongoing Middle East turmoil and the prospect of fewer than expected U.S. rate cuts this year.

Nonetheless, hailing a different view, Saish Sandeep Sawant Dessai, Analyst. Angel One sees gold prices are likely to ease amid fading hopes of a interest rate cut amidst strong economic indicators.

“Persistent threats in the Middle East, particularly between Israel and Iran, heightened the appeal of gold despite stable U.S. weekly jobless claims. The metal's resilience in the face of strong U.S. economic data and hawkish sentiments from Federal Reserve officials underscored its role as a hedge against geopolitical uncertainty and inflation, suggesting a reassessment of expectations for interest rate cuts in the near term,” he added.

Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities also held a similar view and said if the Fed signals reduced rate cut expectations due to concerns over inflation and rising crude oil prices, it could trigger a sell-off in gold.

Gold outlook

As gold prices continue to gain ground and have risen a steep over 15 per cent YTD, presenting a parallel show with equities, bonds etc., analyst remain divided on its outlook. Nevertheless, there is largely a view that because of the global uncertainty as major economies are facing wrath and geo-political tensions are mounting higher, coupled with other factors, including aggressive buying in the precious metal by global central banks which bought more than 1000 tonnes over the last one to two years, gold price outlook remains positive and it can scale to Rs 1,00,000 levels per 10 gm in two-three years.

Further, in the near term too, while in the domestic markets, traders or genuine buyers have shown reluctance to buy gold at such high levels, it is seen to move still higher. The precious yellow metal, infact, can move higher in price by the auspicious Hindu festival- Akshaya Tritiya falling on May 10.

However, Trivedi who anticipates correction in the yellow metal is of the view that in the short term, gold prices in the Comex market may correct towards $2300, while in the MCX market, prices could touch Rs 70,000 before Akshaya Tritiya. On a correction below Rs 70,000, prices may retreat towards Rs 68,500. Investors should monitor Fed comments and geopolitical developments closely to gauge the direction of gold prices in the near term, the analysts added.