Gold prices fell on Monday as traders awaited more U.S. economic data this week after recent data showed that inflation stabilised and lifted hopes for the Federal Reserve to cut interest rates later this year.
The August gold futures were trading at Rs 71,295 per 10 grams on the MCX at 12.08 pm and were down by Rs 540 or 0.75% from the previous day’s closing price. Meanwhile, the July Silver futures were trading at Rs 90,200 per kg and were lower by Rs 1,370 or 1.5% around this time.
Spot gold was nearly unchanged at $2,322.53 per ounce, as of 0342 GMT. Bullion was up nearly 2% in May. U.S. gold futures fell 0.1% to $2,342.70.
“Gold and silver experienced significant price volatility, declining from their recent highs due to diminishing prospects of U.S. interest rate cuts,” said Rahul Kalantri, VP of Commodities, Mehta Equities.
“The core PCE price index indicated easing inflation, raising the probability of a Fed rate cut in September to 53.2%, which helped stabilize gold and silver prices at lower levels. However, a rebound in U.S. bond yields and the dollar index capped the potential gains for these precious metals,” Kalantri said.Investors will look at the Institute of Supply Management’s (ISM) nationwide PMI reading expected at 1400 GMT, Wednesday’s ADP employment report and non-farm payrolls data due on Friday to gauge the U.S. economy‘s health and if it will deter the Fed from cutting rates in September.Data on Friday showed that the U.S. inflation had stabilised in April, raising bets for a rate cut in September. Traders are currently pricing in about a 54% chance of a cut in September, versus about 49% before the report.While bullion is considered an inflation hedge, higher rates increase the opportunity cost of holding the non-yielding asset.
“Gold has support at $2,310-$2,290 with resistance at $2,347-$2,362. Silver has support at $30.20-$29.94 with resistance at $30.73-$30.95,” said Rahul Kalantri.
In INR, gold has support at Rs 71,740-71,520 with resistance at Rs 72,320-72,580. Silver has support at Rs 91,050-90,480 with resistance at Rs 92,270-92,850, Kalantri said.
Meanwhile, Praveen Singh, Associate VP at Sharekhan by BNP Paribas said, “MCX gold may face downward pressure due to possible appreciation in the Indian Rupee on exit poll results.”
(With inputs from agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)