India Gold MCX August Futures fell more than 1 percent on June 17 after the US Federal Reserve signaled it might raise interest rates sooner than expected.
The Fed on Wednesday began closing the door on its pandemic-driven monetary policy with 11 out of 18 Fed officials projecting at least two quarter-point interest rate increases for 2023, said a Reuters report.
On the Multi-Commodity Exchange (MCX), August gold contracts were trading lower by 1.4 percent at Rs 47,798 for 10 grams at 0930 hours. July silver futures were trading 1.5 percent lower at Rs 70,350 a kilogram.
Gold and silver traded steady on Wednesday but the U.S. Federal Reserve decision to raise interest rates sooner than expected could push both precious metals lower.
Both the precious metals settled on a slightly positive note in the international markets. Gold August futures contract settled at $1861.40 per troy ounce, and silver July futures contract settled at $27.81 per troy ounce.
The dollar index sharply jumped around 1% and crossed 91.20 marks after Federal Reserve comments and the benchmark 10-year bond yield also crossed 1.55% levels.
“The Federal Reserve's optimistic view on economic growth and raising interest rates sooner than expected adversely affect precious metals. Gold could test $1800 and silver could test $26.80 per troy ounce again in the short term,” Manoj Kumar Jain, Director, Head-Commodity & Currency Research, Prithvifinmart Commodity Research said.
“Gold has support at $1820-1792 per troy ounce and resistance at $1872-1884 per troy ounce. At MCX, Gold has support at 48100-47550 and resistance at 48660-48880; silver is having support at 70900-70000 and resistance at 71700-72200 levels,” he said.
Jain suggests selling in the gold below 48200 with a stop loss of 48600 for the target of 47500 and in silver below 71000 with a stop loss of 71700 for the target of 69800.
Technical indicators
Ravindra Rao, CMT, EPAT, VP- Head Commodity Research, Kotak Securities
COMEX gold trades about 2% lower near $1823/oz and has tested the lowest level since early May. Gold is pressurized by a sharp rise in the US dollar index and bond yields in reaction to the Fed’s projection of early interest rate hikes.
Sriram Iyer, Senior Research Analyst at Reliance Securities
International spot gold and silver prices crashed on Wednesday after U.S Federal Reserve officials brought forward projections for the first post-pandemic interest rate hikes into 2023.
Domestic gold and silver ended in the green on Wednesday. The central bank held its benchmark short-term interest rate near zero and said it will continue to buy $120 billion in bonds each month to fuel the economic recovery.
Domestic gold and silver prices could start gap down on Thursday morning, tracking overseas prices.
On the domestic front, MCX Gold August below 48300 levels could see a Bearish momentum where further could take 48100-47700 levels. Resistance is at 48400-48600 levels.
MCX Silver July holds support near 70800-69900 levels. Resistance is at 72000-73100 levels.
Abhshek Chauhan, Head Commodity & Currency, Swastika Investmart Ltd
US Fed didn't tapered the bond purchase but signaled two quarter points rate hike sooner than previously expected. US 10-year yields rose marginally to 1.57% from the previous day's low of 1.48%.
Increasing inflation and job market has maintained at a pre-pandemic level, putting pressure on FED to raise the interest rate sooner than expected.
Gold witnessed sharp selling of almost 25$, while the Dollar index gained ground against the basket of all major currencies. Bearish momentum will continue in Gold; however, COMEX Gold is still holding above the crucial support level of $1800.
In the domestic front, Gold has support at 47500-46700 while resistance is at 48500-49000. Silver has support at 69500 and resistance at 72200.
Amit Khare, AVP- Research Commodities, Ganganagar Commodities Limited
Traders are advised to create long positions in a gap down opening near the support levels. Focus important technical levels given below for the day:-
August Gold closing price 48,506: Support 1 - 47300, Support 2 - 46800, Resistance 1 - 48620, Resistance 2 - 48800
July Silver closing price 71,468: Support 1 - 69800, Support 2 - 68500, Resistance 1 - 71800, Resistance 2 – 72300
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