Gold prices saw a notable decline during the morning trade session on Tuesday, May 21, in the domestic futures market. This drop was driven by subdued demand in spot markets and weak global cues.
Internationally, gold prices eased from record highs as a stronger US dollar reduced the appeal of gold as a safe-haven asset. Since gold is priced in dollars, a stronger US currency makes gold more expensive for buyers using other currencies.
See also: Gold Prices Lose Momentum Amidst Strengthening US Dollar
Investors are awaiting the release of the Federal Reserve’s last policy meeting minutes on Wednesday. Recent speculation about potential rate cuts has significantly influenced gold prices. Additionally, geopolitical tensions, persistent inflation, and macroeconomic uncertainties have pushed gold to record highs this year.
In the domestic market, MCX Gold for June 5 delivery was down 0.64 percent, trading at ₹73,892 per 10 grams around 11:20 am. Experts predict that gold prices will remain volatile in the near term.
Kaynat Chainwala, senior manager of commodities research at Kotak Securities, noted that COMEX Gold prices fell after reaching a new all-time high of $2,454.2 per troy ounce on Monday. Hawkish comments from Federal Reserve officials have caused markets to reconsider the trajectory of rate cuts.
Fed Vice Chair Philip Jefferson remarked on Monday that it was too early to determine if the slowdown in inflation is “long-lasting,” while Vice Chair Michael Barr stated that restrictive policies need more time. Chainwala added that last week’s soft US inflation report led traders to bet on a potential rate cut in September. Investors should pay attention to speeches by Fed officials for more policy cues amid a lack of economic data.
Manoj Kumar Jain of Prithvifinmart Commodity Research also expects volatility in gold and silver prices this week ahead of the Fed meeting minutes. However, he believes that gold and silver could hold their support levels of $2,360 and $30.40 per troy ounce, respectively, on a weekly closing basis.
See also: Five Gold Funds Outpacing Global Equities Year-to-Date
“Gold has support at $2,422-2,400, with resistance at $2,454-2,470 per troy ounce, and silver has support at $32.10-31.70, with resistance at $32.74-33.10 per troy ounce in today’s session,” said Jain. “On the MCX, gold has support at ₹74,040-73,800 and resistance at ₹74,660-74,920, while silver has support at ₹94,350-93,500 and resistance at ₹96,100-97,200.”
Jain advises buying gold on dips around ₹74,000, with a stop loss at ₹73,650 and a target of ₹74,700.
Brokerage firm Motilal Oswal Financial Services expects MCX Gold to trade within a range for the session. “Support for MCX Gold is placed at ₹73,500-73,250, while resistance is at ₹74,000-74,350,” the firm stated.
