Thứ Năm, Tháng Sáu 1, 2023
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Gold hits lifetime high as Fed raises interest rates

Yellow future on MCX hit a new high of Rs 61,490/10 grams after a firm opening with the Fed raising interest rates by 0.25% on Wednesday.

Gold on the Comex spot market touched a high of $2,082 an ounce late Wednesday night.

Ajay Kumar, Kedia Commodities, said gold is heading for new Comex highs as the environment favors this rally, with the dollar and bond yields under pressure. With a less hawkish move by the US Federal Reserve, gold could reach $2,115 an ounce, while domestically gold prices will inched towards Rs 62,500 in the next two months, he said.

Vaibhav Saraf, Director of Aisshpra Gems & Jewels, said that gold prices hitting Rs64,000/10g at the beginning of the wedding season is not good for sales and will lead to a decrease in quantity, resulting in reduced inventory.

Despite the US Federal Reserve signaling a pause after 10 consecutive rate hikes, the inflation rate is still much higher than safe.

During the May FOMC meeting, the Fed raised the Fed funds rate by 25 bps to 5-5.25 percent, the highest level since September 2007.

‘At the top of the Fed funds rate’

Fed Chairman Jerome Powell told the media that the latest rate hike by the US central bank could be the last. Despite the recent failure of the First Bank of the Republic, Powell acknowledged that banking conditions have “broadly improved” since March. .

“We may be at the top of the Fed funds rate and could take a pause in the June FOMC meeting.”

Also read: Akshaya Tritiya sees a 40% increase in jewelry sales despite high gold prices

Ravindra V Rao, VP of Commodities Research, Kotak Securities, said that although Powell has opposed any rate cuts, the market is not convinced, given the recent turmoil in the banking sector. banks, coupled with tight credit conditions, are increasing the likelihood of a serious financial crisis. landing in the US and the Fed could cut rates in such an event. He said the swaps are currently priced at 75 basis points for a rate cut by the end of 2023.

Gold prices could continue to move higher amid the Fed’s pivot outlook, an impending recession, strains in the banking sector and uncertainty over the debt ceiling, Rao added.

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