Gold prices traded lacklustre in the early deals in the domestic futures market Thursday morning after the US inflation prints poured cold water on hopes of a 50 bps rate cut by the US Fed.
In international markets, gold prices traded flat after the US consumer prices data release. Traders have shifted their focus towards the US Producer Price Index data and initial jobless claims data, which are due later today. The recent macro data are expected to influence the US Fed's policy decision on September 18.
The US consumer price index (CPI) rose 0.2 per cent last month, matching the advance in July. However, core inflation climbed 0.3 per cent, rising from July's 0.2 per cent increase.
"While headline CPI met expectations at 0.2 per cent month-on-month and was up 2.5 per cent year-on-year, core CPI was higher than expected (0.3 per cent month-on-month versus 0.2 per cent expected) and was up 3.2 per cent year-on-year. The market pricing in a 50bps cut in September cut has virtually been erased. However, the market is still pricing at least 100bps of cuts in total by end-2024. With this being a cautious and data-driven Fed, a 25bps cut is now virtually locked in for next week," said Madhavi Arora, chief economist at Emkay Global Financial Services.
The US dollar rose after the US inflation data showed signs of stickiness and dimmed the prospects of a deeper rate cut. This weighed on gold prices.
MCX Gold traded 0.03 per cent up at ₹71,950 per 10 grams around 9:30 am.
Experts expect gold prices to witness volatility this week, reacting to the US macro numbers, the dollar's movement and speculations regarding the US Fed. They say MCX Gold is witnessing time correction, and the violation of the support and resistance zone will lead to fresh momentum.
According to Manoj Kumar Jain of Prithvifinmart Commodity Research, gold and silver prices may remain volatile this week. However, he expects them to hold their support level of $2,464 and $26.80 per troy ounce, respectively, on a weekly closing basis.
"Gold has support at $2,522-2,510, while resistance at $2,558-2,572 per troy ounce and silver has support at $28.60-28.34, while resistance is at $29.24-29.55 per troy ounce in today’s session," said Jain.
"On the MCX, gold has support at ₹71,700-71,440 and resistance at ₹72,200-72,500, while silver has support at ₹83,800-83,100 and resistance at ₹85,200-86,000. We suggest buying gold on dips around ₹71,650 with a stop loss of ₹71,400 for the target of ₹72,200," Jain said.
Aiyub Yacoobali, Chairman and Managing Director of South Gujarat Shares And Sharebrokers, observed that MCX Gold is enjoying a time correction with the dollar index.
"Volatility in the dollar index is reducing; hence, MCX Gold is witnessing rangebound sessions. On the downside, ₹71,174 – 70,736 will be a major support zone. Fresh supply is possible only below this zone. Fresh upward momentum is possible only if MCX Gold trades above ₹72,062 – 72,349 zone," said Yacoobali.
Rahul Kalantri, VP of commodities at Mehta Equities, pointed out that the ECB is holding a monetary policy meeting today, and potential interest rate cuts could further support gold and silver prices.
"Gold is finding support at $2,495–2,480, with resistance at $2,530–2,542. Silver has support at $28.35–28.10, while resistance is at $28.82–28.98. In INR terms, gold has support at ₹71,710–71,550, with resistance at ₹72,100–72,250. Silver has support at ₹83,770–83,150, while resistance stands at ₹84,950–85,550," said Kalantri.
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