Gold futures have given negative returns in May, dragged by strength in the Dollar Index (DXY) which is now hovering over 104 against a basket of six major currencies. Yellow metal is likely to take cues from the bullion prices in international markets, going ahead. With the US debt ceiling likely to get resolved soon and strong economic indicators in the US, the safe haven appeal of gold is expected to take a hit in the near term.
DXY is up 2.34% over the past 1 month.
On Friday, there was some relief for bullion as MCX Gold futures gained, helped by some softening in the Dollar Index (DXY). The June yellow futures were trading at Rs 59,568 per 10 grams at 12 pm, up Rs 108 or 0.18%. Meanwhile, July Silver futures were trading at Rs 70,717 per kg, up Rs 475 or 0.68%.
On Comex, gold was trading at $1,948.10 per troy ounce and was up by $4.40 or 0.23% while silver futures were trading at $23.04, higher by $0.130 or 0.570%.
Gold prices continued to be dragged lower and settled with a nearly 1% cut at 1940.3$ per ounce on Thursday which was also its lowest level in two months, Prathamesh Mallya, Deputy Vice President, Research – Non-Agro Commodities & Currency at Angel One said. The US dollar has risen to 2-month highs, capping the upside for gold, Mallya said.
While an agreement is likely to come through, between the Republicans and Democrats over the US debt ceiling, a strong labour market GDP growth revision has dented the prospects of gold, the Angel One analyst said.
Risk appetite remains strong on a rally in IT stocks, which is again a bearish factor for the yellow metal, Praveen Singh, Associate Vice President, Fundamental Currencies and Commodities at Sharekhan.”Considering the current levels of US yields, dissipating banking concerns, no Fed pivot in sight, and Dollar Index value, the metal is somewhat overvalued at the current level,” he opined.
Saumil Gandhi, Senior Analyst (Commodities) at HDFC Securities said that gold prices were consolidating in a lower range. MCX Gold June futures have support at Rs 59,250 – 59,080 per 10 grams and resistance at Rs 59,700 – 60,065 per 10 grams. He added that Comex spot gold has support at $1933 – $1924 per ounce and resistance at $1,980 – $1,995 per ounce for the day.
MCX Gold futures have gained 8.18% or Rs 4,498 on the year-to-date basis while negative 0.79% or by Rs 475 on the month-to-date basis, Anuj Gupta, Vice President (VP), Commodity and Currency Research at IIFL Securities said. As for silver futures, the YTD gains stood at 1.23% or Rs 850 as of Thursday’s closing price while this precious metal has lost nearly 5.31% or Rs 3,935 in May.
Gold price today in Delhi is around Rs 61,000 per 10 grams.
Intraday Trading Strategy by Anuj Gupta
– Sell MCX June Gold futures at Rs 59,700 with a stop loss of Rs 60,050 and price target of Rs 59,300
– Sell MCX July Silver futures at Rs 71,000 with a stop loss of Rs 71,750 and price target of Rs 69,500.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)