NEW DELHI: India MCX June futures fell marginally on Friday tracking weakness in gold spot prices which remained under pressure amid a strong dollar.
The dollar steadied near a fresh 20-year high scaled on Thursday on concerns of aggressive US Federal Reserve’s actions to tame inflationary pressures, said a Reuters report.
The bullion has lost over 3 per cent so far this week, its most in two months, the report added. It is sensitive to rising US short-term interest rates and bond yields. Any rise in interest rates also increases the opportunity cost of holding it.
At 09:30 am, June gold futures on MCX were trading 0.08 per cent lower at Rs 50,135 per 10 gram. However, silver futures rose 0.19 per cent to Rs 58,865 per kg.
Gold June futures contract were settled at $1824.60 per troy ounce with a loss of 1.57 per cent and silver July futures contract were settled at $20.77 per troy ounce with a loss of 3.72 per cent on Thursday.
Both precious metals settled on a weaker note in the domestic markets.
“Gold and silver are trading at make-or-break levels and if the dollar index continues to rise with the current pace could push precious metals lower in the coming sessions,” says Manoj Kumar Jain of Prithvi Finmart Commodity Research.
“At MCX, gold has support at Rs 50,000-49,770 and resistance at Rs 50,380-50,550 while silver has support at Rs 58,300-57,500 and resistance at Rs 59,220-6,0000,” he said.
Jain suggests that traders should stay away from the markets while long-term investors can start buying in SIP mode.
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Expert: Pritam Patnaik, Head – Commodities, HNI & NRI Acquisitions, Axis Securities
Gold prices yesterday slid close to $48 from their highs of $1,858 to $1,810, then finically settling around $1,821-22.
This can be directly attributed to the dollar index hitting its 20-year high of 104.95 yesterday. Gold is clearly losing its safe-haven store value to a surging USD.
Ideally, a recessionary economic trend, ratcheting up of the geopolitical situation in the Russian – Ukrainian war, with Russia warning of more destructive measures for aspirant NATO members, Finland and Sweden, and a softer bond markets, should have greatly helped gold bulls’ cause, but the exact reverse has taken place.
This could be because the flash correction in the global equity markets has drained liquidity, leading to selling orders across all asset classes. Additionally, the risk premium is fairly entrenched with the USD, putting further pressure on gold prices. We are in for another volatile session, with a negative bias.
Expert: Sriram Iyer, Senior Research Analyst at Reliance Securities
Domestic gold futures prices could start flat to weaker this Friday morning, tracking subdued overseas markets.
However, the downside could be capped amid bargain buying in the markets. At the same time, a weaker rupee could cap the downside. Today’s range of MCX gold June is at Rs 49,900-50,700.
(with inputs from Reuters)
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)