Gold price today: Yellow metal rallies over 1%; next target seen at Rs 47,500-48,000

India's gold price for August rose more than 1 percent on June 11 tracking positive trends in the international spot prices that jumped to their highest in more than a week after the US Federal Reserve's bleak economic projections boosted demand for the safe-haven metal.

The central bank a day earlier repeated its promise of continued support, estimating the US economy to shrink by 6.5 percent in 2020 and the unemployment rate to be at 0.3 percent at the end of the year, a Reuters report said.

On the Multi-Commodity Exchange, June gold contracts were trading higher by 1.1 percent at Rs 47,173 per 10 gram at 0920 hours. July futures for silver were trading 1.9 percent higher at Rs 49,018 per kg.

As long as gold trades above Rs 47,000-47200 levels, it will open doors for the metal to touch Rs 47,500-48,000 levels, experts say.

Gold and silver showed extreme volatility a day earlier but settled on a flat note. Weakness in the dollar index and profit-taking in the equity market supported both the metals in the afternoon session.

The Federal Reserve's cautious view on the economy puts pressure on the dollar index and could support both the metals again, experts say.

“International gold surged higher on Wednesday after the US Federal Reserve held onto its pledge to ease the economic weakness from the coronavirus pandemic, boosting bullion's safe-haven appeal. Pledge to continue the unprecedented QE and to keep interest rates at current low levels supported prices,” Sriram Iyer, Senior Research Analyst at Reliance Securities told Moneycontrol.

“Technically, LBMA gold spot had a huge volatile session where it bounced back from $1,708 reaching almost above $1,737 levels,” he said.

Iyer added the MCX Gold August contract could give a gap-up open, tracking international prices where above 47,200 will further open a door for 47,500-48,020 levels and 46,500 will hold support.

Expert: Manoj Jain, Director (Head - Commodity & Currency Research) at Prithvi Finmart Pvt Ltd

The US Federal Reserve’s cautious view on the economy puts pressure on the dollar index and could support both the precious metals again.

We expect gold and silver prices to rebound in today's session. Gold can sustain above $1,722 per troy and extend the gains towards $1,744-1,755 per troy ounce, with $1,700 acting as a major support.

At MCX, if gold sustains above 46,650, it can extend gains towards 47,000-47,155 levels. The level of 463,30 is likely to act as a major support for the metal.

COMEX gold has gained more than 1 percent to trade above $1,740 post-Fed decision. The Fed's downbeat growth forecast and projection to keep interest rates low till at least 2022 have pushed the price higher.

ETF inflows also show revival in investor interest. Gold has bounced back after taking support near $1,750 and while the momentum looks on the upside, price is yet to break past the $1,750, hence one needs to be cautious in initiating fresh long positions. Also, the Fed's dovish stance could stabilise equity markets, reducing gold's appeal.

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