Gold, silver price on May 23: Precious metal loses shine, price tumbles as interest rate fears jump

Gold prices on the MCX hovered at Rs 71,779,681 per 10 grams on Friday, hitting an intraday low of Rs 71,550. In the international market, prices maintained a similar trend, hovering around $2,337.84 per ounce. 

This indicates a certain level of stability in the gold market.

Meanwhile, silver hovered at Rs 90,562 per kg, hitting an intraday low of Rs 90,462 on the MCX. In the international market, the price hovered around $30.45 per ounce.

Manav Modi, Analyst, Commodity and Currency, MOFSL, commented: “Gold prices are continuing to trade lower, retreating further from their record highs. This is due to some profit booking and renewed concerns over high interest rates, which are impacting the safe-haven demand for bullions.”

Fed officials’ comments and FOMC meeting minutes this week signalled the market for a delay in rate cut as policymakers have maintained a higher for longer stance, raising concerns regarding sticky inflation. Governor Powell mentioned that he needs more evidence regarding the fall of inflation before shifting to rate cuts.

Market participants are also keeping an eye on the development in Geo-political tensions in the Middle East; post the crash of Iran’s President and foreign minister’s helicopter, there was no sign of further escalation, easing down the whole thing.

Modi said the focus has now shifted to updates regarding China circling Taiwan’s border in the name of military drills. “Any news on the same could boost safe-haven demand further. The dollar index inched higher as U.S. business activity accelerated to the highest level in over two years in May, suggesting that economic growth picked up halfway through the second quarter. Focus today will be on UK retail sales, US Core durables goods orders and Michigan consumer sentiment data.”

Jateen Trivedi, the VP Research Analyst at LKP Securities, explained, “Gold prices plunged below 72,400, dropping 700 rupees today and 2,000 rupees in just three days. This was in response to the Federal Reserve’s meeting minutes, which indicated a lack of urgency in cutting interest rates due to inflation levels still being below the target zone of 2%. This led to a stronger dollar index and profit-booking in gold, which had previously surged to 74,000 on the expectation of an interest rate cut and geopolitical tensions. However, with the Fed’s minutes dampening rate cut hopes and geopolitical tensions easing, gold prices sharply retreated.”

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