For the fifth consecutive week, the price of gold closed in the red after losing 1.32%. Last week, the dollar index reached a 20-year high, while the spot gold price fell to one-year lows. After reaching an intraday low of $1697 per ounce on Friday, precious bullion metal retreated by 2.02% and closed at $1706 per ounce levels on the international spot market.
The price of silver on the international spot market likewise corrected last week, falling 3.12% to settle at $18.69. MCX Silver experienced a severe 2.70 percent correction and closed at 55,587. The belief that the US Federal Reserve will increase interest rates at their upcoming meeting put pressure on billions. The demand for gold and silver as haven assets decreased due to the recessionary fear. The demand for gold, both physical and digital, has decreased, and it is anticipated that this trend will last for a few more trading days, at least until the dollar index doesn’t make a significant turn lower from its recent 20-year high of 109.30 levels.”
Dollar Index: “The dollar index movement, which has been on an excellent one-way move on the upward slope, will likely be the main factor that determines gold prices shortly. Any decline in the dollar index would provide some relief for gold prices; but, a sustained climb over the level of 109.50 would put greater pressure on gold prices “according to Sugandha Sachdeva, vice president of commodity and currency research at Religare Broking Ltd.
ECB meeting: “Markets will pay close attention to the ECB policy decision, which is the main event scheduled for the coming week. Given the concerns over inflation exceeding forecasts, the ECB is anticipated to raise rates for the first time since 2011. However, the Euro Zone has been experiencing a severe energy crisis, which has caused its growth outlook to be revised downward. So, it will be interesting to observe how the ECB achieves a balance “Sugandha Sachdeva remarked.
Rupees VS Dollar: As the Indian National Rupee (INR) struck a new low last week, market participants will be paying close attention to rupee volatility. US manufacturing and service PMI data: This catalyst is anticipated to maintain the price volatility of gold. Although it will directly affect base metals, it will also have an impact on the dollar index, which is currently the main trigger for the price of the yellow metal.
China Crisis: China’s Evergrande issue has had a significant impact on the country’s real estate market. Gold prices will now be impacted by both the rising Covid cases in China and the slowing demand. “The largest importer of both gold and crude oil is China. A decline in demand will harm yellow metal “said IIFL Securities’ Anuj Gupta.
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