Gold futures traded flat on Wednesday amid weakness in the US dollar and lower Treasury yields on expectations that the Federal Reserve will lower interest rates next year.
The February gold futures were trading at Rs 63,042 per 10 grams on the MCX at 10.11 am and were up by Rs 17 or 0.03% from Tuesday’s closing price. Meanwhile, the March Silver futures were trading at Rs 75,025 per kg and were lower by Re 1 around this time.
On Comex, the gold futures were trading at $2,075.1 per troy ounce, up $5.85 or 0.28% while the silver futures were trading at $24.46 per troy ounce, up by $0.066 or 0.27%.
“Gold prices are likely to remain high as weakened US dollar, lower Treasury yields, and heightened expectations of a Federal Reserve interest rate cut keep prices underpinned,” Saish Sandeep Sawant Dessai, Analyst at Angel One, said.
The dollar index near a five-month low and a dip in the benchmark US 10-year bond yield further boost gold’s appeal, as lower US interest rates make non-yielding bullion more attractive, he said.
Recent data indicating a decline in US prices for the first time in over three and a half years has increased expectations of a Fed rate cut in March, with traders currently pricing in an 89% likelihood.
The dollar index (DXY) was up $0.05 or 0.05% against a basket of six top currencies and hovering around 101.51.”On the daily chart, Gold (December contract) is forming a higher high higher low pattern, indicating bullishness in the market. Currently, the price is trading above its 21 & 50 Days EMA,” said Neha Qureshi, Senior Technical & Derivative Analyst, Anand Rathi Commodities & Currencies.
“The Relative Strength Index (RSI) is forming a positive divergence, indicating a bullish outlook. MACD indicator has shown a positive crossover adding to our bullish outlook,” she said.
Looking at potential price levels, there is resistance on the upside at approximately 63300 and 63700. On the downside, support levels are observed around 62,250 and 61,900, Neha said.
Rahul Kalantri, VP of Commodities at Mehta Equities, said, “Gold finds support at $2046-2031, with resistance at $2074-2086. In the case of silver, support is identified at $24.00-23.78, while resistance stands at $24.51-24.68.”
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