Gold prices opened on the Multi Commodity Exchange (MCX) on Tuesday at Rs 68,638 per 10 grams and hit an intraday low of Rs 68,580. In the international market, prices hovered around $2,252.19 per ounce.
Meanwhile, silver opened at Rs 75,750 per kg and hit an intraday low of Rs 75,310 on the MCX. In the international market, the price hovered around $25.28 per ounce.
Manav Modi, Analyst, Commodity and Currency, MOFSL, said, “Gold prices pared gains in the previous session, as the dollar and bond yields rose, after the bullion surged to a fresh record high on growing expectation that the US Federal Reserve could deliver the first interest rate cut in June.”
The dollar rose 0.5% to a more than four-month peak against its major crosses, while yields on 10-year Treasury notes also climbed. US Manufacturing PMI was also reported better than expectations, above 50 mark, slightly weighing on bullion prices.
Fed officials were divided on the pace of rate cut this year, keeping market participants on the edge.
In the previous week, rate cut probability for June was between 65-70%; growing rate cut expectations, safe-haven demand and central bank purchases amid geopolitical tensions have boosted gold by more than 8% this year.
However, amidst the recent data points and comments from a few fed officials, the probability of a June rate cut has dropped to 55%.
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“Recent updates regarding increased tensions between Iran and Palestine is cushioning the prices on lower end, any development in geo-political distress could trigger further volatility in market. Focus today will be on comments from several fed officials, US factory orders and manufacturing PMI from major economies,” said Modi.
Colin Shah, MD of Kama Jewelry, said, “Gold has continued its northward movement and scaled up to a new high yesterday. The upward mobility seen in gold’s performance can be attributed to absence of any major adversities from the recently announced core PCE price index in US last week, keeping the estimation on the US Fed’s rate cut announcement on track. Established as a safe haven asset, Gold provides a meaningful hedge in an uncertain economic environment laden with geo-political tensions. Subject to international weather shift, gold as an asset class is expected to remain elevated on the back of bullish trends.”