Gold prices inched lower on the MCX on Thursday (21 May) morning amid weak global cues and speculations that the US Federal Reserve may tighten monetary policy in the near future due to increased inflationary risks.
MCX gold June futures traded 0.18% lower at ₹1,59,719 per 10 grams around 9:10 am.
The minutes of the Fed’s April meeting showed that most policymakers believed monetary tightening would be required in the near future if inflation remained above the Fed’s 2% target for a prolonged period.
The on 29 April kept the federal funds rate unchanged for the third consecutive meeting at 3.5%–3.75% amid increased risk of inflation rising due to higher global energy prices.
According to Reuters, the CME Group’s FedWatch tool shows traders are pricing in a rate hike this year, with a 39% chance of a 25-basis-point hike in December.
Gold prices tend to fall when interest rates are elevated because it is a non-yielding asset.
Gold prices have been under pressure since the US-Iran war started, dragging international gold prices down by more than 14%.
Experts believe prices may see a healthy rebound after the US-Iran conflict is finally settled.
According to Reuters, US President Donald Trump said on Wednesday that negotiations with Iran were in their final stages.
Moreover, according to reports, said on Thursday it was reviewing Washington’s latest position on ending the war.
“Gold is supported by growing optimism that a US-Iran peace agreement could ease inflationary pressures and reduce concerns over interest rate hikes,” Jigar Trivedi, Senior Research Analyst at IndusInd Securities, noted.
“Minutes from the Fed’s April policy meeting showed that most officials believe a rate increase this year could still be required if inflation remains above the Fed’s 2% target,” said Trivedi.
Gold: Key levels to watch
According to Trivedi, MCX gold June futures may drop to ₹1,59,500 per 10 grams as sentiment is mildly tilted towards weakness in the global markets.
Ravi Singh, Chief Research Officer (Research) at Master Capital Services, said immediate support is positioned around ₹1,58,000, correlating with the recent swing base and rebound area.
“A decisive close below this level could lead to further declines toward the broader support zone at approximately ₹1,55,000. Conversely, immediate resistance is identified near ₹1,61,000, while a more significant barrier exists around ₹1,64,500, where sellers have historically regained dominance. A sustained breakout above this level may reignite bullish momentum, potentially facilitating another upward movement in the ongoing trend,” said Singh.
Manoj Kumar Jain of Prithvifinmart Commodity Research believes gold has support at $4,510 and $4,467, while resistance is at $4,580 and $4,615 per troy ounce, and silver has support at $74.20 and $72, while resistance is at $78.80 and $80.40 per troy ounce in today’s session.
MCX gold has support at ₹1,59,100 and ₹1,58,400, and resistance is at ₹1,61,100 and ₹1,62,300, while silver has support at ₹2,70,000 and ₹2,66,600 and resistance is at ₹2,78,000 and ₹2,83,350, said Jain.
“Gold is likely to trade in a range of ₹1,58,400 and ₹1,62,300 in today’s session, and we suggest booking profits on every rise in long positions of gold,” said Jain.
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Disclaimer: This story is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.