Gold: Bullion Market Activity

Gold closed the week with a weekly gain of 0.23% and closed at $1,926 an ounce on Friday, hovering near its strongest levels in nine months. The precious metal rally on Dollar weakness and on week US Economic data up around 6% in January 2023 alone. Fear of prolong recession in US and extending it to Europe are the immediate trigger for a sudden interest in the precious metal. In the last two-year Bullion Market lost around 6%, in the financial year 2021 it lost 5.7% and in the year 2022 it dropped 0.07%.

The precious metal gained for the fifth straight week in a row. The Fed with December 2021 hike of 50 Basis points moved the key short-term rate to a range of 4.25% to 4.5%, its highest level in 15 years. The era of Dollar strength is over and dusted now; dollar index inching closer to 7-month low. US CPI December rose to 6.5% YoY down from 7.1% in the Nov 22. In Sep it was highest since 1982 which hit 40 Year High. It was the slowest annual advance for the CPI since October 2021 and all the indication pointing towards smaller rate hikes ahead of the January end or February 2023 the FOMC meeting. Similar sign of slower downward trend of Consumer prices in the UK was also visible, which fell for the second straight month in December. Some analysts are of the view that inflationary pressures may have finally peaked in Western economies.

The precious metal or Bullion is highly sensitive to the rates movements, as higher rates raised the opportunity cost of holding the non-yielding precious metal.

We expect the GOLD to touch new lifetime high this year.

Silver lost 1.76% this week and closed at 23.94. Silver registered positive returns last year with a gain of 3.22% in the financial year 2022. And in the month of January 2023 Silver gained 0.42%.