Gold futures were trading flat near a two-month low on Thursday. This came as investors considered remarks from two U.S. Federal Reserve officials regarding unexpectedly high January inflation, which tempered hopes for swift and deeper interest rate cuts this year. The April gold futures were trading at Rs 61,366 per 10 grams on the MCX, down by Rs 77 or 0.13% from Wednesday’s closing price. Additionally, March silver futures were trading at Rs 70,242 per kg, slightly higher by Rs 90 or 0.13%.
Spot gold remained flat at $1,991.70 per ounce (Oz), after reaching its lowest point since December 13 on Wednesday. U.S. gold futures also remained flat at $2,003.40/Oz. According to Saish Sandeep Sawant Dessai, Analyst at Angel One, the current U.S. inflation data has prompted investors to revise their outlook on Federal Reserve interest rate cuts, and upcoming U.S. retail sales and producer price index data will further gauge market dynamics.
Looking ahead, gold is expected to trade higher towards 61780 levels and could potentially move higher towards 62060 levels following a break. However, there is potential for increased volatility in today’s session.
The U.S. dollar index’s continued slight drop allowed both gold and silver to rebound from their daily lows. Fed Vice Chair for Supervision Michael Barr and Chicago Fed President Austan Goolsbee provided contrasting perspectives, with Barr supporting a cautious approach to cutting rates while Goolsbee warned against waiting too long. This comes after a surprise in U.S. consumer prices caused gold to decline significantly on Tuesday.
Despite the inflation data, traders are still anticipating rate cuts this year, with projections of 97 basis points (bps) of cuts. With the first cut likely coming in June, gold and silver prices are expected to remain volatile.
In terms of technical analysis, gold has support at $1980-1978 with resistance at $2005-2018, while silver has support at $22.18-21.98 and resistance at $22.52-22.68. In INR, gold has support at Rs 61,210-61,020 with resistance at Rs 61,580 and Rs 61,720, while silver has support at Rs 69,540-68,980 with resistance at Rs 70,750 and Rs 71,380.
Finally, in the realm of other precious metals, palladium dropped 0.5% to $929.95/Oz while spot platinum fell 0.3% to $886.51/Oz and silver slipped 0.1% to $22.40.
Additional Insight: The fluctuations in gold and silver prices are largely impacted by shifts in U.S. Federal Reserve policy and economic data, such as inflation reports and retail sales figures. With investor expectations around interest rate cuts affecting the precious metals market, these factors will continue to contribute to price volatility in the near term. It’s also worth noting that the overall strength or weakness of the U.S. dollar has an inversely proportional impact on the price of gold, as a stronger dollar tends to make gold more expensive for buyers in other currencies.
