Weekly Outlook on Gold - 05 April 2024

In February, global central bank gold reserves continued their upward trajectory, expanding by 19 tonnes. This marks the ninth consecutive month of growth, although the increase was notably lower compared to January, which saw a total addition of 45 tonnes. Despite the month-to-month fluctuation, the year-to-date figures show a substantial increase, with central banks collectively adding 64 tonnes over January and February, a significant rise compared to the same period in 2022.

The People’s Bank of China emerged as the largest buyer in February, boosting its gold reserves by 12 tonnes to reach a total of 2,257 tonnes. This accumulation represents the 16th consecutive month of growth in China's gold holdings, underscoring the country's ongoing interest in diversifying its reserve assets.

                 Gold prices reach all-time high amidst Rate cut speculations & Economic uncertainty

Gold prices have stabilized on Friday after reaching new highs, driven by expectations of lower US interest rates in this year. This optimism is tempered by a wait-and-see approach among traders, who are eagerly anticipating key employment data. Federal Reserve Chairman Jerome Powell has emphasized that the central bank has the flexibility to delay its first rate decrease, given the economy's strength and recent inflationary pressures.

Investors are closely monitoring the forthcoming U.S. March employment report, expected to provide critical insights into the economy's trajectory and potential implications for monetary policy. This data will likely steer the sentiment surrounding gold in the near term.

Technically, Current support level is estimated at $2260 and resistance levels at $2315 for COMEX gold. Similarly, in the Indian market (MCX), support is expected around 69000 INR, indicating a price level where buying interest could potentially increase. On the upside, resistance is seen at 70200 INR. While overall trend remains bullish, the risk-reward balance may not favor aggressive buying at current levels. 

Hence, traders are advised to focus on buy on dips strategy towards established support levels. Also, monitor key economic data releases and geopolitical events to access the gold future direction and trading opportunities. 

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