Gold Price Outlook: US Dollar, bond yields, equity markets – reasons that may impact price movement in yellow metal; here is what to do

The US Dollar continues to gain strength along with higher bond yields. These two are the major dampeners for price movements in gold. Apart from this a positive commentary on economy in the US is also favouring equity markets. That may cause some concern for Gold and Silver, Anug Gupta of IIFL Securities says

MCX August Gold Futures ended at Rs 46,956 per 10 gm, getting expensive by Rs 86 or almost 0.2 per cent from the last closing price on Thursday. His strategy for today is to Sell at Rs 47,200. Source: Reuters

The starting of the July series for stock markets has been positive for the domestic bourses with Sensex ending at a lifetime high on a closing basis on Friday while Nifty giving its second-best closing. The global markets also ended positively with S&P 500 index closing at a record while global shares also finished at an all-time high. What does this suggest? Will there be an impact on the investment in Gold and Silver? Expert Anuj Gupta, Vice President (VP), Commodity and Currency Research at IIFL tells this about the outlook of bullion over the next week.

The readers must know that Gold is considered as a haven and people direct their investments towards gold when the other investment avenues are not doing great including the stock markets. While this is not a rule, it is a general trend.

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Gupta said that the outlook remains negative for gold and silver over the next week. His strategy for traders is to sell Gold and Silver futures and book profits. This is despite the fact that both Gold and Silver futures ended positively on Friday.

The US Dollar continues to gain strength along with higher bond yields. These two are the major dampeners for price movements in gold. Apart from this a positive commentary on economy in the US is also favouring equity markets. That may cause some concern for Gold and Silver, he added.

Gupta, however, said that the existing weakness is a good investment opportunity for long term investors. June has been a good month for investors who have been planning to make fresh investments in yellow metal as the prices have come down appreciable this month not just in Gold but silver as well.

Gupta said that the MCX Gold Futures have become cheaper by over 4.6 per cent in June while MCX Silver Futures prices have come down by over 6 per cent during this period. In terms of value, Gold Futures prices have dipped by over Rs 2300 per 10 gram while Silver Futures prices by Rs 4000 per kg.

As for domestic prices, the fall has started reflecting not only on exchanges but in the physical markets too, Gupta said. In Delhi, the price of physical gold has come down to Rs 47,400 per 10 gram while that of silver is Rs 68,000, Gupta said.

In Noida jewellery markets, the prices are more or less similar, the VP said.

He expects more correction in the international prices, going forward, but that could have limited impact because of strengthening US Dollar leading higher exchange rates.

Gold futures on Wednesday were trading around USD 1778 while Silver futures were trading around USD 25.90. He expects Gold Futures to test levels around USD 1740 while Silver Futures to test levels around USD 24.50 within a fortnight if the negative sentiments continue.

MCX Gold Trading Strategy

MCX Silver Trading Strategy

Meanwhile, MCX July Silver Futures were trading at Rs 67,900 per kg on Friday at the closing time, down by Rs 167 or 0.2 per cent from the last closing price. He recommended selling at Rs 67,800. He puts the stop loss at Rs 68,500 while the target price at Rs 66,500.

As for prices in Dubai, 24k Gold was trading at AED 215.75 (4,359.43 Indian Rupee) per gram while 22k was trading at AED 202.75 (4,0 96.76 Indian Rupee). This information has been sourced from Dubai Gold & Jewellery Group (DGJG) website. The website claims DGJG to be the largest trade body for Dubai’s jewellery industry (DGJG).

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