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Gold hits Rs 57000/10g 1st time on weak $, US recession fears

MUMBAI: Gold prices in India hit an all-time high of Rs 57,300 per 10 grams on Tuesday, thanks to a 20% rise in the international price over three months. The rise was aided by dollar weakness – the yellow metal has an inverse relationship to the greenback.
On Tuesday, gold prices on the Multi Commodities Exchange (MCX) and physical markets broke above Rs 57,000 per 10 grams. And given global and local conditions, analysts expect gold to reach the Rs 60k mark soon. Wedding season demand is also helping the rally, industry players said.
The dollar has strengthened against most major currencies since the US Federal Reserve hiked interest rates. This in turn led to a fall in the gold price. As a result, it crashed from a 2022 high of about $1,950 an ounce in early March to a low of $1,636 in early October. Like the talks about a delay in fedAs the rate hike decisions circulated, gold also began its northward move. This coincided with the weakness of the dollar.
The main reason for the rally in the yellow metal is dollar weakness, according to Kama Jewelry’s MD Colin Shah. “The US Fed hinted at a slower rate hike or, at most, a final rate hike of 25 basis points (100 basis points = 1 percentage point) in this cycle. The recession fear in the West is also empowering gold as pressure on the dollar mounts,” Shah said.
Also in the local market, after falling below Rs 50,000 in October-November 2022, the price of the yellow metal is on the rise. During this period, domestic gold prices have been more resilient, particularly due to the strong depreciation of the rupee, which fell by more than 10% in 2022, according to a report from Kotak Securities.
With rumors of a recession in the US and Europe circulating, analysts expect the price of gold, which is considered a hedge during economic downturns, to rise. According to Ravindra Rao of Kotak Securities, gold prices have risen since 1973 during five of the seven U.S. recessions. “Gold could finally get the recession it needed to shine in 2023,” Rao said.
“Research from the World Gold Council suggests that the yellow metal has been a top performer among asset classes during periods of stagflation. A period of stagflation is a reasonable scenario for (first half of 2023), although there are regional variations,” added Kotak Securities. report. .
In the international market, gold is expected to surpass its all-time high of $2,078. In the domestic market, Rao has a price target of Rs 60,000-62,000 for 2023. However, “if inflation continues to slow down and the US Fed takes a break from its rate hikes, the target price could be reached earlier in the first half.” of 2023,” said Rao.
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