Gold, silver prices zoom after Fed rate hike, analysts see positive momentum ahead

• In the national capital, gold prices climbed by ₹450 to ₹59,350 per 10 grams on Thursday.
  
  
• The dollar index slipped to seven week lows after the Fed meeting outcome, leading to safe-haven demand for precious metals.
  

Gold prices bounced back on Thursday after retracing for two straight days. Its prices jumped over 1% to end the day at $1969.6 per ounce.

In the national capital, gold prices climbed by ₹450 to ₹59,350 per 10 grams on Thursday. Analysts believe that the precious metal prices will move ahead with a positive momentum.

The Federal Reserve hiked the fed funds target rate range by 25 basis points to 4.75-5% on Wednesday. The dollar index slipped to seven-week lows after the Fed meeting outcome and the US 10-year bond yields also slipped below 3.50% once again that led to safe-haven demand for precious metals.

“Gold prices rose after the Fed raised interest rates; however, it indicated that further increases in borrowing costs might be postponed due to the recent failure of two US banks. Gold has traditionally been regarded as an inflation hedge, and a low-interest-rate environment makes non-yielding bullion a more appealing bet,” said Prathamesh Mallya, AVP- research, non-agri commodities and currencies, Angel One.

Silver also zoomed ₹815 to ₹69,800 per kilogram on Thursday. In the overseas markets, both gold and silver were trading higher at $1,975 per ounce and $22.84 per ounce, respectively.

“The Fed is having to balance inflation risks and economic stability, both are factors that could drive further safe-haven demand for precious metals,” said Rahul Kalantri, VP of commodities at Mehta Equities.

In the last two weeks, troubles at four banks – Signature Bank, Silicon Valley Bank, First Republic and Credit Suisse — have sent global equities into a tizzy. That, however, also helped gold prices breach the ₹60,000 per 10 gram this Monday.

Going ahead, analysts believe that the gold prices will continue to trend higher. The US treasury secretary Janet Yellen, during a hearing before a Senate sub-committee, said that regulators aren’t looking to provide ‘blanket’ deposit insurance to stabilise the US banking system.

“With prospects of nearing an end to the fastest rate hike in decades coupled with a looming recession and Yellen’s comments, we might see gold prices trading with a positive momentum,” said Ravindra Rao, VP- head commodity research at Kotak Securities.

Kalantri however believes that gold prices could be volatile saying that gold has support at $1,955-1,942 while resistance is at $1,986-1,998. Analysts also predict that gold prices might touch ₹70,000 per 10 grams by the end of the year.

(With PTI inputs)

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