Gold prices traded lower in the domestic futures market on Tuesday, September 3, morning tracking weak global cues. MCX Gold for October 4 delivery traded 0.15 per cent lower at ₹71,493 per 10 grams around 9:20 am.
In the international markets, gold prices dropped as the dollar rose to a two-week high. A stronger dollar is negative for gold as it makes the yellow metal less appealing to other currency holders.
Investors await upcoming US macro data this week, including ISM surveys, JOLTS job openings, the ADP employment report, and the US August non-farm payrolls report, to gauge the magnitude of the Federal Reserve's expected interest rate cut this month.
Interest rate cuts are a key trigger for gold prices.
When interest rates are reduced, the return on interest-bearing assets like savings accounts, bonds, etc., decreases. This makes these assets less attractive compared to gold, as the yellow metal serves as a store of value.
Besides, a cut in interest rate weakens the dollar. Gold is priced in dollars globally. A weak dollar makes gold cheaper for investors holding other currencies.
In the last two sessions, spot gold prices have come down to ₹71,259 per 10 grams from ₹71,703 per 10 grams on August 29. The recent fall in gold prices could be attributed to muted demand in the spot market and the lack of fresh triggers.
The market has already discounted a 25 bps rate cut by the US Fed this month. Experts say gold prices face a lack of fresh, positive catalysts to move higher. If the upcoming US macro data this week highlights some weakness in the US economy and the Fed decides to a rate cut of more than 25 bps, gold prices may see a rally.
The dollar's rise has also weighed on gold prices. According to brokerage firm Angel One, a stronger dollar, which makes gold pricier for foreign buyers, and the prospect of lower rates, which reduce the opportunity cost of holding gold, continue to weigh on the metal. However, a rate cut at the upcoming US Fed meeting would likely keep gold prices elevated.
Moreover, experts pointed out that ceasefire talks between Israel and Hamas have eased the risk premium on precious metals in international markets.
Analysts at Angel One see support for MCX Gold at ₹71,390 and ₹71,110 and resistance at ₹71,850 and ₹72,040.
Manoj Kumar Jain of Prithvifinmart Commodity Research expects gold and silver prices to remain volatile this week amid volatility in the dollar index and ahead of the US job data. However, on a weekly closing basis, they could hold their key support levels of $2,464 per troy ounce and $28.20 per troy ounce, respectively.
"Gold has support at $2,522-2,500, while resistance at $2,545-2,560 per troy ounce and silver has support at $28.66-28.40, while resistance is at $29.20-29.55 per troy ounce in today’s session," said Jain.
"On the MCX, gold has support at ₹71,400-71,180 and resistance at ₹71,800-72,040, while silver has support at ₹83,850-83,300 and resistance at ₹85,100-85,800," Jain said. He suggests buying silver on dips around ₹83,800 with a stop loss of ₹83,200 for the target of ₹85,000.
According to Rahul Kalantri, VP of commodities at Mehta Equities, gold has support at $2,478-2,461 and resistance at $2,512-2,527. Silver has support at $28.22-28.10 and resistance at $28.70-28.90.
In INR, gold has support at ₹71,450-71,210 and resistance at ₹71,950-72,140. Silver has support at ₹81,750-81,150 and resistance at ₹83,080-83,750, Kalantri said.
On the other hand, Hashim Yacoobali, Director of South Gujarat Shares And Sharebrokers, observed that after witnessing a selloff from ₹74,731 to ₹67,400, gold witnessed a relief rally.
"On the upward ₹72,250 – ₹72,500 will act as the major resistance zone whereas on the downward side ₹70,500 – ₹70,100 will act as the major support zone. From a trading perspective, the trend remains bullish as the dollar index trend is negative and witnessing supply pressure at every higher level. Rally above ₹71,790 possible up to ₹72,130 – ₹72,250 – ₹72,500," said Yacoobali.
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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.
