Gold Surges Beyond $1990 Despite Dollar`s Strength, Sentiments Remain Cautious

Published on Jul 28, 2023 13:23

Gold futures jumped to near 2 month highs in mid Asia session today, however strong gains in the US dollar may weigh on the sentiments for the metal. The consecutive rate hikes signal concerns over inflation, driving demand for precious metals as an inflation hedge. The Fed`s 25 basis point increase, the European Central Bank`s rate hike, and the Bank of Japan`s accommodative stance contribute to the current market sentiment.

The dollar index surged to a three-week high of 101.75, boosted by stronger-than-expected US economic data which supported the case for the Federal Reserve to tighten policy further. Improved GDP, pending home sales, durable goods orders, and lower jobless claims contributed to the dollar`s strength. EURUSD is down 0.12% at $1.0987 after an ECB rate hike, while GBPUSD is down 0.13% at $1.2787.

COMEX gold futures traded higher by $42.60 an ounce at $ 1988.50 after hitting the session high of $1994.30. The counter should still continue to face resistance near $2000 levels as strength in US dollar might continue to weigh on gold. MCX gold for august delivery traded up Rs 171 at Rs 59121 per 10 grams. Jump in prices also came on back of fresh buying after yesterday’s plunge of more than Rs 500.