Gold prices on the MCX hovered at Rs 72,336 per 10 grams on Wednesday, hitting an intraday low of Rs 72,308. In the international market, prices maintained a similar trend, hovering around $2,362.79 per ounce. This indicates a certain level of stability in the gold market.
Meanwhile, silver hovered at Rs 85,521 per kg and hit an intraday low of Rs 85,358 on the MCX. In the international market, the price hovered around $28.59 per ounce.
Manav Modi, Analyst, Commodity and Currency, MOFSL, said, “Gold prices rose in the yesterday’s session, recovering marginally from steep losses witnessed last week on the back of continuous updates regarding, geo-political tensions, interest rate cut expectations and Fed official comments.”
The U.S. producer prices increased more than expected in April amid strong gains in the costs of services and goods, leading traders to pare back bets of a first rate cut in September. Both US PPI and Core PPI were reported better than expectations at 0.5%, said Modi.
Market participants are cautiously waiting for US CPI data which is scheduled later today. Meanwhile, Fed Chair Jerome Powell in his speech yesterday said that he expects U.S. inflation to continue declining through 2024 as it did last year and noted it was unlikely the Fed would have to raise interest rates again, supporting the overall sentiment for bullions.
“Better than expected producers inflation is a headwind for gold, the safe haven asset benefited from increased demand amid heightened geopolitical tensions in the Middle East, hence any updates regarding the same could increase the volatility in the market. Along with US CPI, focus today will also be on the EU GDP, US Retail sales and NY state manufacturing index,” said Modi.
Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities said, “Gold witnessed minor buying above 72000 in MCX and $2340 in Comex as participants awaited the CPI numbers due on May 15, 2024, which are expected to be lower. A lower CPI could support gold, as the dollar index is likely to weaken in response. Sentiment remains positive for gold, as interest rate cuts might be delayed, but any cuts would be a fresh trigger for the dollar index to trend negatively. Gold’s broad support levels are around 70000-70500, with resistance at 73500 before the event.”