Yesterday at 11:30 PM(ISD) FED hiked interest rates by 0.75 BPS. Furthermore, this is the second consecutive time when FED raises interest rates by 0.75 BPS. To soar the surging inflation, Powell shows fear of increasing the interest rates in an upcoming meeting in the month of September.
The outcome of the meeting outshines the precious metals thereby dragging the dollar down by 0.11%.
In the context of Gold, the World Gold Council says that the demand for gold climbs up to 42 percent in the first half of the year 2022. On the other hand, for the second half, the demand may diminish due to surged inflation which may erase the disposable income in the coming days ahead.
At 1:52 PM(ISD) MCX Gold Futures opened green and made a high of 51245 and currently trading around 51192. Moreover, MCX Silver Futures opened green and made a high of 56640 and currently trading around 56566.
Consequently, both gold and silver are outperforming despite the hike in interest rates by 0.75 BPS.
If we look into the recent data, then things are going worse but still, the US is not having any roadmap to curb inflation down. Raising the interest rates is not the only solution to control inflation. However, consecutive hikes in interest rates may cause a recession and deteriorates the economic health of the country.
Seems impossible but let’s see what happens…!!
During the meeting, FED says that they will slow down the pace of increasing interest rates if the economy cools down. Furthermore, their focus is to reduce inflation from 9.1% to 2%.
Has the Bull Run started???
Today, we recommended buying in Gold at the opening bell on the MCX division. On the other hand, we have already recommended buying of Comex Gold around 1721. We are having an upside target of $1755—$1770 and then to $1788 in days to come.
Gold looks positive on the daily chart. Traders can buy and accumulate Gold as a positional call with a stop loss below $1675 on a closing basis.
On the other hand, Silver too breached the resistance level of $19.50. Any sharp decline around $19.20 will be the best buying opportunity with a stop loss below $18.00 on a closing basis for the upside target of $21—$22.50.
For more day-to-day updates, stay tuned with us!