Gold climbed to a more than one-week high on Thursday after US Federal Reserve Chairman Jerome Powell struck a dovish tone, indicating much remains to be done before policy tightening begins, while a softer dollar lent further support to the metal.
Gold prices in India traded higher on the Multi Commodity Exchange (MCX) Thursday following gains in international spot prices after the US Federal Reserve maintained the benchmark lending rates near zero along with a dovish commentary and failed to give a timeline for its tapering plans.
At 11:35 am, gold futures for August delivery rose 0.78 percent to Rs 47,949 per 10 grams as against the previous close of Rs 47,577 and the opening price of Rs 47,720 on the MCX. Silver futures traded 1.51 percent higher at Rs 67,390 per kg. The prices opened at Rs 66,699 as compared to the previous close of Rs 66,390 per kg.
“The gold prices rose after dovish US Fed’s comments and a weaker dollar. A stable rupee is also supporting prices of precious metals on the domestic front. Concerns over economic growth amid rising coronavirus cases lifted safe-haven appeal for gold,” said Ajay Kedia, Director, Kedia Advisory.
Kedia expects the trend in gold and silver prices to remain bullish going ahead supported strong physical demand in India and China. As per a World Gold Council report, global demand for gold rose in the second quarter to its highest quarterly level in a year as central banks and investors stepped up purchases.
“On MCX, support for gold is seen at Rs 47,550 and resistance at Rs 48,340. Silver may find support at Rs 66,800 and resistance at Rs 68,600,” Kedia added.
International gold climbed to a more than one-week high on Thursday after US Federal Reserve Chairman Jerome Powell struck a dovish tone, indicating much remains to be done before policy tightening begins, while a softer dollar lent further support to the metal, said a Reuters report.
Spot gold rose 0.5 percent to $1,815.36 per ounce, having earlier hit a peak since July 20 at $1,817.35. US gold futures climbed 0.9 percent to $1,815.00.
“Gold prices got some upward push after Fed did not lift the interest rates from near zero level and reiterated that the US has not reached “substantial further progress” to start curbing the central bank’s $120 billion a month in asset purchases,” said Sandeep Matta, Founder, TRADEIT Investment Advisor.
According to him, $1,800 will act as major support while $1,835 will be a major hurdle precious metal needs to clear to come into a bullish trajectory.
“Gold on MCX is expected to trade on positive side however strong dollar, risk of hawkish Fed will weigh on gold and keep it sideways until is breaks and sustain above Rs 48,200 levels. Current gold contract on MCX is also nearing the expiry and will operate with high volatility,” Matta added.
Powell said the US job market still had “some ground to cover” before it would be time to pull back support and that it was “ways away” from considering interest rate hikes. Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
Investors will now turn their attention to the US weekly jobless claims data.
Meanwhile, Powell’s remarks sent the US dollar index to a more than two-week low. A weaker greenback makes gold cheaper for holders of other currencies. US Treasury yields also fell after the Fed gave no details on when it is likely to reduce bond purchases.
“Technically, gold futures bulls and bears are on a level overall near-term technical playing field. Bulls’ next upside price objective is to produce a close above solid resistance at the July high of $1,835.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,775.00,” said Amit Khare, AVP- Research Commodities, Ganganagar Commodities.
First resistance is seen at the overnight high of $1,807.60 and then at this week’s high of $1,812.00. First support is seen at last week’s low of $1,789.10 and then at $1,780.00
On the domestic front, a stable Indian rupee amid recent volatility in the equity market lifted gold and silver prices.
Here are gold rates across major cities:
Here are silver rates across major cities:
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