Gold price prediction: Meltdown as prices fall by Rs 600/10 gram amid profit booking. Can bulls stage a comeback?
Gold prices fell on Friday as investors took refuge in the greenback amid growing tensions between Israel and Iran. Moreover, a status quo on the US interest rate has helped the dollar index (DXY) strengthen, reducing some appeal in the yellow metal. The domestic gold prices fell sharply taking cues from the international prices.
Gold rate today
On the MCX, the August Gold futures were trading at Rs 98,664, down by Rs 665 or 0.67% from the Thursday closing price. Meanwhile, gold contracts on the COMEX were hovering around $3,367.20 per troy ounce, plunging by $40.90 or 1.20%.
The movement in gold rates are inversely related to the dollar movement. When the Federal Reserve cuts interest rates, the returns on dollar-denominated assets like the US treasury bonds or savings accounts become less attractive and hence global investors may move their money to countries with higher interest rates, reducing demand for USD.
Commenting on the action, Pranav Mer, Vice President, EBG - Commodity & Currency Research at JM Financial Services said that the breather this week was on profit-booking, after the U.S. Fed's hawkish comments on interest rates and easing geo-political risk premium.
The Street awaits U.S. President Donald Trump's decision if the US will enter the Iran-Israel war in two weeks.
"On charts prices may find some resistance around Rs 99,300-99,650, while on the downside support is seen at Rs 98,000-97,650," Mer said.
The price of physical gold in Delhi-NCR market is still above the Rs 1 lakh mark. This includes a 3% GST levy.
Renisha Chainani, Head - Research at Augmont also sees profit-booking in gold after record highs of Rs 1,01,078 per 10 gram on the MCX.
"Precious metals have reversed as support from growing geopolitical tensions in the Middle East is offset by a stronger dollar overall and the possibility of fewer interest rate reductions from the US," Chainani said.
Technical triggers
"Gold prices are consolidating around record-high levels in the range of Rs 99,000($3,360) and Rs 101,000 ($3,475).
Despite the Fed's hawkish tone, ongoing geopolitical tensions between Iran and Israel continue to offer downside protection for gold, Jateen Trivedi, Vice President Research Analyst - Commodity and Currency, LKP Securities opines. "The broader trend remains range-bound to positive, with a key support level seen at $3,290, and strong resistance near $3,500 on Comex. Unless there is a clear resolution on geopolitical fronts or a shift in Fed commentary, gold is likely to stay buoyant within this broad band," he added.
Silver price today
The July silver futures plunged by Rs 1,395 or 1.3% and were trading around Rs 1,05,998. On the COMEX, silver contracts fell by $1.128 or 3.06% per troy ounce to trade around $35.78.
Silver prices have retraced from its high, next support is Rs 105,300($35.50), said Chainani, adding that prices should sustain this support for the bull trend to continue. If this support is broken, the next downside level is Rs 104,000 ($34.50), he added.
Also Read:
Commodity Radar: MCX crude oil futures cross 200-DMA amid Israel-Iran tension. Can it breach this crucial resistance zone?
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