Gold prices traded lower in the morning trade in the domestic futures market on Thursday (May 25) amid weak global cues and low demand from the local spot market. In international markets, gold prices traded in a narrow range as the US debt ceiling negotiations dragged. The rising US dollar and higher US Treasury yields also weighed on gold prices.
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“Negotiators for Democratic President Joe Biden and top congressional Republican Kevin McCarthy held what both sides called productive talks on Wednesday to try to reach a deal to raise the United States’ $31.4 trillion debt ceiling and avoid a catastrophic default,” reported Reuters.
The minutes of the May 2-3 Federal Reserve meeting did not offer clear signs of a pause on rate hikes in June which is negative for gold. When interest rates fall, the dollar and bond yields fall which results in low returns on deposits. In this case, people tend to turn towards gold which increases the demand and prices for the yellow metal.
The yellow metal has been volatile of late primarily because of the dollar’s rise and lingering US debt ceiling talks.
Macroeconomic factors, such as inflation, faltering growth and currency fluctuations influence gold prices. During times of economic uncertainty, the equity market turns highly volatile which dents the prospects of returns. In these scenarios, investors turn to gold as a safe haven asset.
MCX Gold traded 0.32 per cent lower at ₹59,670 per 10 grams around 9:45 am.
What should be your strategy for gold today?
Most analysts and brokerage firms expect gold prices to remain volatile for the session due to continued uncertainty around the US debt ceiling situation.
Gold and silver prices to remain volatile in today’s session ahead of the US jobless claims data and could face steep resistance at higher levels.
“Gold has support at $1,950-1,934, while resistance at $1,978-1,992 per troy ounce. Silver has support at $23-22.68, while resistance is at $23.50-23.80 per troy ounce. At MCX, gold is having support at ₹59,600-59,400 and resistance at ₹60,060-60,280 while silver is having support at ₹70,500-69,950 and resistance at ₹71,660-72,200,” said Jain.
Jain suggests selling gold on the rise around ₹60,100 with a stop loss of ₹60,400 for a target of ₹59,500 and selling silver around ₹71,700 with a stop loss of ₹72,350 for a target of ₹70,500.
“Gold (XAUUSD) has support at $1,930 while resistance at $1,980. Silver (XAG/USD) has support at $22.80-22.64, while resistance is at $23.22-23.40. In the Indian rupee terms, gold has support at ₹59,740-59,580, while resistance is at ₹60,180, 60,390. Silver has support at ₹70,420-69,720, while resistance is at ₹71,650–71,920,”.
Brokerage ICICI direct believes gold prices may trade with a negative bias amid a firm US dollar and rise in US treasury yields across the curve.
“MCX Gold is likely to break the level of ₹59,680 to continue its downward trend towards the level of ₹59,500 as long as it sustains below the level of 50 DMA (daily moving average) at ₹60,080. MCX Silver is expected to trade in a downward trend towards the level of 100 DMA at ₹70,080,” said ICICI direct.
MCX Gold may witness selling and trade in the range of ₹59,400-59,950.
