In global markets, gold edged higher to $1,741.87 per ounce after falling to nine-month lows in the previous session. The US dollar was flat near fresh 20-year highs reached on Wednesday, easing some pressure on gold. Among other precious metals, spot silver firmed 0.1% to $19.20 per ounce, while platinum fell 0.3% to $853.25.
In global markets, gold has fallen sharply in last few days as market players preferred US dollar as the safe haven asset. The sell-off has dented market sentiment and general bias may be on the downside unless US dollar corrects significantly or we see a recovery in commodities at large, say analysts.
“COMEX gold trades marginally higher near $1742/oz after testing 9-month low yesterday. Gold inched up as US dollar index lost momentum after testing 2002 as FOMC minutes failed to surprise. FOMC minutes reaffirmed that the central bank will continue with rates hikes to get inflation under control. Also supporting price is lower bond yields and global growth worries," said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
Axis Securities has a neutral stance on gold. “Gold has emerged as the best-performing asset class for the first six months of 2022. As an asset class, it has been the beneficiary of high volatility in the equity market since 24th Feb'22, driven by the prevailing geopolitical crisis, rising inflationary expectations, and rising oil and commodity prices. These macro developments are limiting the performance of equity as an asset class and a clear direction is likely to emerge only after the volatility settles at a lower level for a longer time."
Until then, Axis Securities added, “gold will continue to find an edge over the other asset classes. It would be treated as an instrument providing flight to safety as slowdown risk mounts over the US market led by aggressive rate hike expectations. The US bond yields were largely volatile in the last one month and it has risen to 3% on an expectation of aggressive rate hikes. Against this backdrop, Gold will continue to be a preferred asset class until uncertainties over the Russia-Ukraine conflict fades and will continue to attract investments as a proven hedge against other asset classes. It will continue to find support from the geopolitical risk and the inflation pressure in the global environment. We continue our Neutral stance on Gold and recommend a ‘Buy-on-Dips’ strategy."
