Gold prices on the MCX hovered at Rs 72,187 per 10 grams on Monday, hitting an intraday low of Rs 71,725. In the international market, prices maintained a similar trend, hovering around $2,339.25 per ounce. This indicates a certain level of stability in the gold market.
Meanwhile, silver hovered at Rs 91,479 per kg to hit an intraday low of Rs 91,461 on the MCX.
In the international market, the price hovered around $30.79 per ounce.
Navneet Damani, a seasoned Senior VP – Commodity Research at Motilal Oswal Financial Services, said: “Gold inched higher after marking their worst week in five and a half months, amidst a fall in Dollar, change in interest rate cut expectations and Geo-political tensions. More than a $100 move was seen in bullion last week, but towards the end, it shed more than 3%, its worst weekly dip since early December.” His expertise in the field provides valuable insights for our audience.
However, over the weekend, updates regarding tiff between Israel and Hamas increased, along with that China has been sighted around the borders of Taiwan, overall increasing the risk premium for safe haven assets.
On other hand, minutes from the Federal Reserve’s last meeting published previous week showed the central bank’s path to 2% inflation could take longer than expected. Fed officials have also been actively presenting their case on the monetary policy, inflation and possible path ahead. Bets for a rate cut in September continues to hover below 50% mark.
“Speculators boosted their net-long position in COMEX futures by 21,030 contracts in the week to 21 May. That’s the highest level since April 2020. Central banks are also showing no end to buying. Iran imported 4.6t in the first two months of the year, up 283% y/y. US and UK markets are shut today on the back of Memorial Day and bank holidays, respectively. However, the focus this week will be on US GDP, inflation and consumer confidence data. Broader trend on COMEX could be in the range of $2325 2355, and on the domestic front, prices could hover in the range of Rs 71,000-72,000,” said Damani.
Silver prices plummeted over 6% from their recent 52-week highs of $32.5, ultimately closing more than 3% lower. This decline was spurred by hawkish commentary from the Fed. Traders’ sentiment reflects growing uncertainty about the US central bank implementing multiple rate cuts in 2024, though there is a 73% probability of a single rate cut by November, per Axis Securities Weekly Commodity Insights report.
Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said, “Gold has traded weak last week, experiencing a significant selloff from Rs 74,350 to Rs 71,500, a drop of more than Rs 2,800 from weekly highs. This decline is primarily due to the reduced likelihood of the Fed cutting rates early, as indicated by the recent meeting minutes. Despite this pullback, the overall rally in gold remains strong, and this week’s decline should be viewed as a buying opportunity, with base support at Rs 69,000. If prices fall below Rs 69,000, a further selloff towards Rs 66,000 could be expected.”