Gold prices likely to witness pressure

Gold prices have historically inched higher during the times of Akshaya Tritiya, but this time amidst the rising anticipation of the Fed’s aggressive policy stance, the yellow metal could see some pressure on the price front, said Motilal Oswal Financial Services, an Indian financial services company offering a range of financial products and services.

As the country approaches the season of prosperity, it is very important to see how has the gold prices have moved till now and what does it look like from here on.

There are several factors which have contributed to gold’s movement in past few years, the Covid-19 pandemic being one of the major one. Although, there are three major factors to keep an eye on for gauging direction in gold -- geo-political tensions, inflationary concerns and the central bank’s policies.

Spot gold after touching almost the record highs is witnessing selling pressure on higher range, holding strong around $1900 per ounce. Although keeping in mind Fed’s aggressive stance and its impact on inflation, it could see some weakness for the next few quarters.

As the pandemic started to recede, market participants were hit by sudden updates regarding Russia invading Ukraine, which escalated quickly supporting the metal prices. There is a climate of uncertainty currently in the market which is keeping the market participants on edge. Multiple peace talks events between the two countries have not yielded any positive outcomes as yet.

Market participants have shifted their focus to the Fed policy meeting and their hawkish stance; although updates regarding the geo-political tension and fear of rising Covid cases in China will remain important to keep an eye on.

“We have seen earlier as well that market participants tend to discount the future expectations especially from the fed quite early which we can see in the prices as well.”