While the energy complex has managed to throw off a long list of bearish developments over the past year, markets appear vulnerable to more corrective action, especially oil production from the United Arab Emirates, Iraq, Venezuela, Iran and Saudi Arabia.
Talking about growth, selling in markets such as Gold, Silver, Palladium, and Platinum could lead to turnover spill over the spill. While the dollar is likely to remain weak, the action of the U.S., suspect that the currency will be managed to support straight-forward gold and silver prices. Especially, if oil prices resume the recent decline in action, says the bullion king of India – Prithviraj Kothari.
Retrospectively, precious metals markets have begun to show sensitivity to classic inflation signals, and therefore, the U.S. CPI release could present a major junction for gold and silver. In other words, a warm U.S. CPI report could result in fears of a rate hike and a resurgence of a stronger dollar and could push prices below $1,950 in April gold and below $25.00 in silver in May. It is a strange prediction that historically warm CPI reading could result in lower precious metal prices!
Let us move on to geopolitical tensions. The war might be coming to an end (keeping a larger hope) as Ukraine surrenders, and now, the aftermath would be soon resurfacing. The financial markets including equities, currencies and commodities made so many rejoicing rallies to catastrophic falls at places.
Other metals have seen their prices surge, with fears of a shortage of physical metals adding to the price hike. The London Metal Exchange saw “unprecedented movements”, and was forced to suspend trading in nickel on Tuesday after prices more than doubled to $100,000 a tonne. But gold stole the limelight. According to Prithviraj Kothari, all know that gold acts as insurance in times of uncertainty. Thus, it did not only prove its worth as a haven asset, but it also proved to be an instrument to protect one’s wealth during this crisis.
The gradually unfolding events between Russia and Ukraine have compelled markets to sell gold in cash. But we all know that diversification is the key. Even though one is tempted to sell off their positions, they should not, and rather, they should hold on to our best possible. And let us not forget, as bullion king of India says, we are also dealing with a potentially very high inflation rate.
Furthermore, gold had observed a bearish open drive on Thursday, which signalled a carry-forward selling after the risk-on impulse bolstered in the market. The encouraging undertone is a result of a likely ceasefire between Russia and Ukraine. Post the agreement of Ukrainian President Volodymyr Zelenskyy on a diplomatic solution to halt the battering of Ukraine’s economy, equities, and risk-sensitive currencies took a sigh of relief.
Gold prices fell sharply from a high near $2,070 on Tuesday. The precious metal has eased almost 6.5% in the last two trading sessions. But we should not forget that the US CPI, which is due next week, holds significant importance as it will dictate the probable monetary policy action from the Federal Reserve (Fed). It will also play a critical role in influencing gold prices along with the consequences of the ongoing war.