Gold and silver prices in India opened sharply lower on Wednesday, following a sharp slump in global precious metal prices, as concerns over high inflation fuelled interest rate hike fears.
MCX gold rate for August futures contracts opened lower by ₹2,517, or 1.65%, at ₹1,49,926 per 10 grams as against its previous close of ₹1,52,443 level. MCX silver price for July futures contracts opened lower by ₹4,519, or 1.89%, at ₹2,34,009 per kg, as compared to its previous close of ₹2,38,528 level.
In the international market, gold prices slumped to an 11-week low, as the dollar and crude oil prices rose on renewed hostilities between the United States and Iran, raising concerns about inflation and interest rate hikes.
Spot gold price declined 1.8% to $4,187.59 per ounce, hitting its lowest level since March 23. US gold futures for August delivery dropped 1.7% to $4,213.40. Spot silver price plunged 1.5% to $64.43 per ounce.
The dollar rose, making greenback-priced bullion more expensive for holders of other currencies. Crude oil prices rallied, stoking concerns around inflation and cementing expectations that interest rates would stay higher for longer, Reuters reported.
According to the CME FedWatch tool, traders are now pricing in a more than 70% chance of a Federal Reserve interest rate hike by December.
While gold is seen as a hedge against inflation, higher interest rates tend to weigh on the non-yielding metal.
Investors will watch out for key US inflation reports this week, including the May Consumer Price Index data later in the day and the Producer Price Index reading on Thursday, to gauge the Fed’s monetary policy stance.
Gold Price Outlook
Jigar Trivedi, Senior Research Analyst at IndusInd Securities said that the outlook for MCX gold rate and MCX silver prices remain negative.
“MCX gold price may find support at ₹1,49,000 level, while resistance is placed at ₹1,51,000. The outlook remains negative and ‘sell on bounce’ strategy can be deployed,” said Trivedi.
For MCX silver price as well, he suggests a ‘sell on rise’ strategy as outlook remains weak.
“Support for MCX silver price is seen at ₹2,30,000 per kg, while resistance is seen at ₹2,40,000 level,” said Trivedi.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
(With inputs from Agencies)
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