Gold and silver prices were lacklustre on the MCX on Thursday morning amid an elevated US dollar and 10-year bond yields, even as the US inflation data for July eased expectations of a rate hike by the US Federal Reserve in September.
MCX gold October futures were 0.05% up at ₹1,54,960 per 10 grams, while MCX silver September contracts were 0.16% down at ₹2,37,450 per kg around 9:10 AM.
The dollar index reclaimed the 100.02 mark, making the greenback-denominated bullion expensive for buyers in other currencies and creating a demand fatigue. The dollar index has risen about 0.50% this week.
On the other hand, the US 10-year bond yield climbed to 4.69%, weighing on gold’s safe-haven appeal.
Meanwhile, US gold prices rose to a more than two-month high on Wednesday after an in-line US inflation data, which raised expectations that the US Fed will keep rates on hold in its September meeting on 15-16 of the month. US gold futures December contracts rose to $4,509 per troy ounce during the session.
The Bureau of Labor Statistics data showed the US Consumer Price Index (CPI) inched up 0.1% month-on-month in July after dropping 0.4% in June. Year-on-year, the CPI increased 3.4% after rising 3.5% in June.
An in-line US inflation print followed last week’s jobs data, which showed US nonfarm payrolls dropped by 23,000 in July, against expectations of an 80,000 increase.
The current inflation and jobs market trends have strengthened chatter that the US Fed may delay rate hikes. According to Reuters, the CME FedWatch Tool shows traders see a 38% chance of an interest rate hike in September, down from from 48.4% on Tuesday.
Investors now await Producer Price Index (PPI) data, due later today, for more clarity on cooling price pressures.
However, the Personal Consumption Expenditures (PCE) price index is the Fed’s preferred inflation gauge. The US PCE price index for July is due on 26 August.
Meanwhile, the deadlock between the US and Iran is keeping investors wary.
US President Donald Trump claimed Washington has total control of the Strait of Hormuz, but Iran has denied it. Meanwhile, Iran appears to be positioning for a protracted confrontation as media reports suggested the Islamic Republic is reorganising its military to be more agile and aggressive.
Gold and silver prices outlook
As per Jigar Trivedi, Senior Research Analyst at IndusInd Securities, MCX gold October contracts may drop amid profit booking in the international markets, with support at ₹1,54,000 per 10 grams, while MCX silver September futures may rise to ₹2,40,000 per kg, but there is a probability of profit booking.
Ravi Singh, Chief Research Officer at Master Capital Services, said MCX gold prices are now approaching a major hurdle near ₹1,56,000, marked by the falling trendline on the chart, and a sustained breakout above this level could trigger the next leg of the rally.
“Until then, buy-on-dips remains the preferred strategy, with the broader structure staying positive,” said Singh.
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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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