Gold Prices Today: Firm safe-haven demand takes yellow metals closer to record high on COMEX

Concerns that the US’ economy is heading towards a possible recession spooked traders, and pushed gold prices above the key level of $2,000-per-ounce mark on COMEX.

Gold prices in domestic and international markets increased slightly, extending their gains further due to rising safe-haven demand from investors.

Concerns that the US economy is heading towards a possible recession spooked traders, and pushed gold prices above the key level of $2,000-per-ounce mark.

Gold prices on COMEX are inching towards a record high touched last year as poor manufacturing data from the US, coupled with signs of a cooling job market supported the safe-haven demand.

“The decline in US job opening numbers coupled with weaker ISM manufacturing numbers on Monday has diminished the hopes of further rate hike from the Fed (US Federal Reserve) in its next meeting, leading to a sharp rally in bullion,” ICICI Securities said in a report.

The US Fed has been raising interest rates since last year to cool off simmering inflation in the country. At its next meeting, the central bank could pause its rate-hike cycle due to substantial weakening of the US economy. This is bullish for gold prices as a pause in rate-hike cycle would encourage traders to invest more in assets such as gold.

At 11.38am, the gold price on COMEX was at 2,041.20 per ounce, up 0.1 percent from the previous close, while the April gold contract on Multi Commodity Exchange of India (MCX) was around Rs 60,822 per 10 grams, up 0.3 percent.

“Ten-year US yields tumbled 2.24 percent to close at 3.33 percent. The US Dollar Index slumped to two-month low on bets that the US Federal Reserve is nearing its rate tightening cycle, which will eventually be followed by rate cuts sooner than later,” said Praveen Singh, fundamental currency and commodities analyst at Sharekhan, BNP Paribas.

On the Multi Commodity Exchange of India, the front-month gold contract hit a record high of Rs 61,399 per 10 grams on Tuesday, tracking global indicators.

According to Singh, gold contracts on COMEX have a support around $2,000 per ounce, while resistance is seen at $2,030, followed by $2,050. On the MCX, the most-active June gold contract is seen in the range of Rs 60,400-Rs 61,800 per 10 grams.

“Momentum buyers eye all-time high of $2,074.88 (on COMEX) reached in August 2020. Below $2,000, the support emerges around $1,975,” Singh said.

Back home, investors will also focus on the outcome of the Reserve Bank of India’s monetary policy meeting on Thursday.

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