The brokerage firm Motilal Oswal (MOFSL) has revised the upward potential target of gold to ₹81,000, while maintaining a positive bias on the precious metal. MOFSL, in its latest report, recommended a ‘buy on dips’ approach on the yellow metal with advice to accumulate near ₹69,000.
Meanwhile, the brokerage firm further advised accumulating gold around $2250 for targets towards $2650 on COMEX.
On Wednesday, gold prices fell by ₹2 to ₹72,405 per 10 grams in futures trading as speculators reduced their positions. On the MCX, gold contracts for August delivery were trading lower by ₹2 at ₹72,405 per 10 grams, with a business turnover of 16,781 lots.
Also read: Gold price jumps ahead of US GDP data release, silver rate rebounds after retracing from record high
“Gold started the year steadily, but bullish momentum has picked up significantly, posting gains of around 14 per cent year-to-date in the domestic market,” MOFSL said in its report.
The report also highlights the astounding growth registered by Silver this year, having already gained upward mobility of 27 per cent returns year-to-date in 2024.
Silver prices reached an all-time high of ₹97,100 in the local market on Wednesday, while gold prices increased by ₹250, reflecting strong trends in overseas markets, as reported by HDFC Securities. Extending its gains for the third consecutive session, silver surged by ₹1,150 to ₹97,100 per kg, up from ₹95,950 per kg on Tuesday.
In the futures market, silver also achieved a record peak of ₹96,493 per kg on the Multi Commodity Exchange (MCX) on Wednesday.
What’s driving the rally?
According to MOFSL, market participants are closely watching the US central bank for hints regarding potential interest rate cuts, which has been keeping them on edge.
Despite expectations for rate cuts earlier in the year, hawkish comments from Fed officials have tempered those beliefs, leading to a reduction in anticipated rate cuts from over four to approximately two for the year 2024. However, the firm believes that the probability of a Fed rate cut has shifted gradually from March through May and June, and now to September 2024.
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“Geopolitical tensions have added to the risk premium for gold as concerns about debt pose long-term challenges to overall growth. The economic indicators from the US continue to show strength in the economy. Additionally, along with central bank buying, festive and wedding-related domestic demand could boost sentiment. It says that although ETF buying is struggling, investment and central bank buying are maintaining strong demand momentum,” said Navneet Damani, Group Senior VP – Commodity Research at Motilal Oswal Financial Services.
Insight:
The report from MOFSL indicates rising bullish momentum in the gold and silver markets, with both metals showing significant gains in the domestic and international markets. The shift in Fed rate cut expectations and geopolitical tensions are key factors influencing the rally in precious metals. Investors are advised to closely monitor these developments for potential market opportunities.
