Gold rates in the domestic futures market rose on Monday, despite a strong US dollar and concerns over Federal Reserve interest rate cuts. MCX Gold for December 5 expiry was 0.71 per cent up at ₹74,470 per 10 grams. International spot gold prices rose about 0.4% to $2,571.11 per ounce, after hitting a two-month low last week. Gold posted its biggest weekly decline in over three years on Friday.
The market is reducing expectations for a US Fed rate cut in December, despite strong US economic and inflation data. Gold prices typically respond positively to rate cuts, but if the pace and magnitude are not met, they may struggle to maintain their upward momentum.
Gold prices are negatively impacted by firming US dollar and bond yields due to robust macroeconomic data. However, experts remain optimistic about gold for the long term due to geopolitical uncertainty and the start of the US rate cut cycle. Gold prices rose after last week's declines, increasing the geopolitical premium in the market.
"Market participants reacted to reports suggesting that President Biden's administration has allowed Ukraine to use US-made weapons to strike deep into Russia, in a significant reversal of Washington's policy in the Ukraine-Russia conflict. On the data front, US retail sales increased slightly more than expected in October, highlighting the economy's resilience. US headline inflation was also reported to be better than expected at 2.6 per cent, raising questions over the Fed's rate cut stance ahead," Expert pointed out.
He announced that Fed Chair Jerome Powell and other officials will speak this week, with the focus on preliminary manufacturing and services PMI data from major economies.
Experts Advice
Rahul Kalantri, VP of commodities at Mehta Equities, suggests gold and silver have support at $2,568-2,545, $30.38-30.15, and $30.92-31.20, respectively. In INR, gold has support at ₹73,880-73,750 and resistance at ₹74,410-74,680. Silver has support at ₹88,080-87,550 and resistance at ₹89,350-90,980. Manoj Kumar Jain of Prithvifinmart Commodity Research suggests waiting for market stability before initiating fresh positions in these precious metals.
Gold and silver prices are expected to remain weak due to the strength of the dollar index, US bond yields, and a crypto rally. Gold's support is at $2,554-2,540, while silver's support is at $30.10-29.74. Gold's support is at ₹73,720-73,440, while silver's support is at ₹87,750-87,000.
