Amidst the market’s anticipation of rate cuts later this year, gold and silver prices on MCX for June futures contracts remained steady on Thursday, trading at Rs 73,100 per 10 grams. This stability follows a recent upward trend, with gold prices increasing by nearly Rs 800 over the past two days. Similarly, MCX July silver contracts saw a rise of Rs 292, or 0.34%, to Rs 87,157 per kg, gaining Rs 1,448 in two days.
Gold prices have not just seen a slight increase today but are building on a significant rise in the previous session. This upward movement, influenced by the weakening of the dollar and bond yields, is a positive sign for potential investors. The growing likelihood of rate cuts by the U.S. Federal Reserve as early as September has boosted gold’s appeal as an investment, leading to a rise in prices. The dollar’s weakening and Treasury yields’ fall following the inflation report further support this optimistic trend.
In the U.S. markets, spot gold rose 0.1% to $2,388.10 per ounce as of 0255 GMT after gaining more than 1% to its highest since April 19 on Wednesday. U.S.U.S. gold futures also rose 0.1% to $2,393.20. Today, the U.S.U.S. Dollar Index (D.X.Y.) hovered below the 105 mark at 104.16, dropping 0.18 or 0.18%.
“Currently, there’s a 61% chance that the Federal Reserve might change its stance by September, compared to 30% in April. Gold had been trading in a narrow range recently after hitting a record high in mid-April,” said Neha Quereshi of Anand Rathi Commodities.
The daily trading chart for gold shows a bullish, engulfing candlestick pattern, forming higher highs and higher lows, indicating a positive trend. This optimism is further supported by gold bouncing back from its 21-day exponential moving average (E.M.A.), acting as a support level. A positive Relative Strength Index (R.S.I.) divergence indicates growing market momentum. Quereshi added that it’s important to monitor potential resistance levels at 73,315 and 73,958, with support levels at 72,700 and 72,200.
Silver soared by Rs 1,800 to hit a fresh record high of Rs 88,000 per kg on Thursday, while gold prices jumped Rs 650 to Rs 74,050 per 10 grams, in line with global solid trends. According to H.D.F.C. Securities, silver prices rose for the second straight session, hitting a lifetime high of Rs 88,700 per kg in Delhi. It had closed at Rs 86,900 per kg in the previous session.
Meanwhile, the price of gold increased by Rs 650 to Rs 74,050 per 10 grams. In the previous session, it had closed at Rs 73,400 per 10 grams. The Rise in bullion prices on Thursday was a direct response to the lower U.S. inflation figures released yesterday, which raised the prospect of interest rate cuts as early as September. In April, the underlying U.S. inflation rate fell for the first time in six months, further supporting the Rise in gold prices.
Following the data release, the U.S. dollar index slipped to a five-week low, and U.S. Treasury yields declined, which is also positive for the precious metal. In the international markets, spot gold on Comex was trading at $2,386 per ounce, up by $21 from the previous close.
“Gold prices maintain a positive stance overall; some minor profit booking may occur from higher levels, especially as buying driven by the anticipated consumer price index (C.P.I.) event appears to have been priced in,” said Jateen Trivedi, VP Research Analyst of Commodity and Currency at L.K.P. Securities.
Silver was also quoted higher at $29.55 per ounce, up from $28.80 per ounce in the previous session. The swift Rise in silver prices is primarily due to its unique industrial properties, a critical factor that sets it apart from gold. Since April, the increase in critical industrial metals like copper, aluminum, zinc, and lead prices due to worries over supply threats has prompted speculators to bet primarily on silver. In addition, record-high gold prices, escalating geopolitical tensions, and hopes of U.S. interest rate cuts also aided the sentiments, providing a comprehensive understanding of the factors driving silver’s price rise.