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Sushil Finance’s report on Gold

Gold steadied around a 3 – 1/2 – month high on Thursday as prospects for further U.S. interest rate increases put the brakes on a recent rally, while palladium touched record highs on tight supplies. The U.S. dollar hit a four – month low against the euro amid optimism about the euro zone economy. However, gold, which tends to move counter to the U.S. currency, was unable to capitalize on the dollar weakness and hovered just below its 3 – 1/2 – month high hi t yesterday. Still, after digesting the U.S. Federal Reserve’s minutes from its December policy meeting released on Wednesday, market participants have begun to doubt the sentiment that recent U.S. tax changes will lead to inflation, and the widely – expected path of future rate hikes, analysts said. Gold is highly sensitive to rising U.S. interest rates because they increase the opportunity cost of holding non – yielding bullion while boosting the dollar, in which it is priced. Gold also benefited from safe – haven purchases. S pot gold marked its highest since Sept. 15 at $1,321.33 on Wednesday but eased as the dollar recovered after minutes from the Fed’s December policy meeting had initially bolstered expectations for more increases to U.S. interest rates.

We expect gold prices to trade sideways on the back of profit booking after rise in prices.

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