Gold prices have experienced pressure as major global central banks tighten monetary policy. Despite the downturn, gold prices have risen over 2% year-to-date (YTD) and 6.6% in the past year. Gold futures on the Multi Commodity Exchange (MCX) for April expiration closed at ₹55,769 per 10 gm on Monday, ahead of the US Federal Reserve's FOMC meeting on March 21st and 22nd, 2023. In the last session, gold and silver were trading higher on the international market at USD 1,856 per ounce and USD 21.24 per ounce, respectively.

Jatin Gohil, Technical & Derivative Analyst at Reliance Securities, notes that MCX Gold April futures have observed a strong rally followed by a broad range of consolidation with strong support near Rs. 55,600 and resistance near Rs. 56,000. This trend may continue in the evening session until support or resistance breaches with a strong candle and volume.

Globally, gold prices fell as speculators awaited U.S. Federal Reserve Chair Jerome Powell's speech this week for cues on future rate hikes. Gold lost 1.4% to $1,821.99 per ounce as central bank unrest fueled expectations of higher interest rates. Gold futures slid 1.6% to $1,826.10 per ounce.

According to Kunal Shah, Head of Commodities Research at Nirmal Bang Commodities Private Limited, the U.S economy continues to grow strongly, with major indicators like retail sales, PCE index, and new home sales all pointing towards ongoing tightening. This could lead to another 1-2 hikes of 25 basis points (bps) and Europe 2-3 hikes of 50bps-25bps on the cards. In the near term, gold prices may remain under pressure, but central banks have been major gold buyers for diversification over the last six months.

Kunal Shah explains that gold is now a strategic investment due to the rapid rise in central banks' balance sheets from pandemic-related printing and subsequent deleveraging. With never-before-seen monetary experiments and Cold War-like scenarios globally, the downside and timespan of gold's correction may be smaller and short-lived, perhaps 1-3 months before it begins its upward journey. He remains very bullish on gold with a two-year horizon and a target of $2,200.

Colin Shah, MD of Kama Jewelry, states that gold prices have been under pressure due to monetary policy tightening by major global central banks. Despite the fall, gold prices have risen nearly 2% YTD and 6.6% in the past year, even posting double-digit returns in 2022. He adds that a hike in rates makes gold less attractive as an investment class, and a rise in global rates pushes the USD upwards, making gold buying more expensive. Gold prices are likely to face some pressure as central banks indicate further rate hikes in 2023. However, escalating geopolitical tensions and a global economic slowdown will support gold prices on the upside.

Rajesh Rokde, Vice Chairman of the All India Gem and Jewellery Domestic Council (GJC), suggests that gold still appears bullish in the near future, and every dip in the gold rate presents a good opportunity to buy gold, either through MCX or physical purchases. He advises keeping a close eye on the gold market as March comes to an end.

On Monday, the rupee gained 5 paise to settle at 81.92 versus the US dollar. The dollar index, which measures the strength of the US dollar against a bundle of six currencies, climbed 0.6% to 104.58.

Vipul Das is a Digital Business Content Producer at Livemint with over five years of expertise in the finance and business sector. His specialties include stocks, mutual funds, personal finance, tax, and banking, and he is proficient in industry research and business reporting. Vipul holds a bachelor's degree from Dr. CV Raman University and has completed a Diploma in Journalism and Mass Communication (DJMC).