Gold and silver prices traded lower on the MCX on Friday morning, 31 July, due to profit-taking amid an uptick in the US dollar and escalating US-Iran tensions, even as US inflation data came in below expectations, easing expectations of aggressive rate hikes by the US Federal Reserve.
MCX gold August futures were about 0.50% down at ₹1,42,547 per 10 grams, while MCX silver September contracts were 0.40% down at ₹2,19,117 per kg around 9:10 AM.
In the previous session, the MCX gold August futures contract jumped 1%, while the silver September futures contract clocked a gain of more than 1% after the US Federal Reserve maintained interest rates steady.
Gold and silver prices declined on Friday morning as investors booked some profit in light of the ongoing US-Iran conflict.
Jordan’s air defences shot down five missiles launched from Iran Thursday morning, hours after the U.S. military announced it had completed “a heavy wave of strikes against Iran” in response to an earlier Iranian missile attack on a US base in Jordan.
The conflict is expanding to other countries in the region, with Egypt and Saudi Arabia becoming increasingly drawn into it.
The Middle East conflict kept oil prices up. Brent crude, despite some easing, traded near $88 per barrel on Friday morning.
The dollar index climbed about 0.40%, making gold more expensive for buyers using overseas currencies.
The US 10-year bond yields eased to 4.65% from 4.71% in the previous session. 10-year bond yields are up over 5% this month amid expectations of US Fed rate hikes.
The US Fed kept rates unchanged on 29 July, but three dissenting members of the committee voted in favour of a 25-basis-point rate hike. This underscores the growing discomfort among policymakers about inflation, which has been above the Fed’s 2% target for the last five years.
US inflation eased in June, but experts believe it could rebound due to higher energy prices driven by the Middle East conflict and US tariff policy.
Marking its weakest reading since April 2020, the US Personal Consumption Expenditures (PCE) Price Index declined 0.1% month-over-month after climbing 0.5% in May. On a year-over-year basis, the PCE Price Index increased 3.7%, up from an unrevised 4.1% in May.
Notably, the US Consumer Price Index (CPI) inflation eased to 3.5% in June from 4.2% a month earlier
Gold and silver prices: Key levels to watch
As per Ravi Singh, Chief Research Officer at Master Capital Services, the next key resistance for MCX gold is placed near ₹1,46,000, which also coincides with the 200-day EMA.
“As long as gold sustains above the ₹1,40,000 support, the broader strategy remains buy on dips, while a decisive move above ₹1,46,000 could strengthen the recovery further,” said Singh.
As per Manoj Kumar Jain of Prithvifinmart Commodity Research, gold has support at $4,064 and $4,020, and resistance is at $4,120 and $4,155 per troy ounce, while silver has support at $58.20 and $57.70, and resistance is at $59.80 and $60.60 per troy ounce in today’s session.
Jain said MCX gold has support at ₹1,42,400 and ₹1,41,750 and resistance is at ₹1,44,000 and ₹1,45,100, while silver has support at ₹2,17,700 and ₹2,16,000 and resistance is at ₹2,22,200 and ₹2,24,500.
“We suggest booking profits in gold and silver long positions in every rise due to the weekend session,” said Jain.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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