Gold prices soared to a new high, reaching Rs 65,298 per 10 grams on the MCX on Thursday, marking a significant increase of over Rs 2,700 within the first week of March. This surge in the value of the precious metal can be attributed to the expectations of a potential interest rate cut by the US Federal Reserve in June. Both domestic and international markets have been positively impacted by this anticipated move.
Federal Reserve Chair Jerome Powell’s statement about the possibility of lowering interest rates in the coming months has boosted market sentiments, leading to gold hitting a record high of $2,152 in international markets on Wednesday. Anuj Gupta, Head of Commodity & Currency at HDFC Securities, highlighted that gold prices have surged by 5.24% on Comex and by 4.34% per 10 grams on the MCX. The market is optimistic about the potential interest rate cuts by the US Federal Reserve.
On a year-to-date basis, the MCX gold contract price has increased by 3.12% as of Wednesday. Despite a slight decline in MCX Silver on Thursday morning, silver futures have seen a substantial increase in March, while still showing a decline year-to-date. The commodity and currency expert’s analysis indicates a positive trend in the silver market.
Gold’s rise can be attributed to the weakening of the dollar index (DXY), which has fallen below the 104 mark once again. The dollar index is currently trading at 103.80 against a basket of major currencies, showing relative stability. On the Comex, gold futures remained steady at $2,158.50 per troy ounce on Thursday morning trade.
Neha Qureshi, Senior Technical & Derivative Analyst at Anand Rathi Commodities & Currencies, emphasized that gold’s recent surge to a new peak has surprised the market. Factors such as weak US economic data, banking concerns, geopolitical tensions, and strong demand from China have supported the increase in gold prices. Central bank purchases and consumer demand have also contributed to the strengthening of gold, despite its traditional inverse relationship with bond yields.
Qureshi highlighted the importance of monitoring the market’s expectation regarding the Federal Reserve’s timing for reducing borrowing costs. Currently, there is a 65% probability of a rate cut in June, according to Qureshi’s analysis. The bullish trend in the MCX April Gold contract is evident from the pattern of higher highs and higher lows, although caution is warranted due to the Relative Strength Index (RSI) being in the overbought territory.
Looking ahead, resistance levels for gold are projected at Rs 65,300-65,500, with support levels at Rs 64,500-64,300. The price of gold in major physical bullion markets like Delhi and Ahmedabad is reported to be Rs 66,000 per 10 grams, while the price of 1 kg of silver stands at Rs 75,500.
Additional Insight:
The current surge in gold prices is fueled by a combination of global economic uncertainties, market volatility, and the potential impact of central bank policies. Investors are turning to gold as a safe-haven asset amid the fluctuating economic landscape and the anticipation of further monetary policy adjustments. Furthermore, the ongoing tension between the US and China, coupled with geopolitical factors, is contributing to the demand for gold as a hedge against risk. These factors are likely to continue influencing the precious metal market in the coming months.
