Gold price drops on dollar's rise, silver rates rise; experts unveil strategy for precious metals
Around 9:05 AM, MCX Gold August 5 contracts were 0.30 per cent down at ₹ 97490 per 10 grams, while MCX Silver September 5 contract traded 0.10 per cent up at ₹ 1,11,748 per kg.
The dollar's gain and easing tariff-related concerns weigh on gold prices. The dollar index climbed 0.20 per cent, making gold expensive in overseas currencies.
Meanwhile, US President Donald Trump denied reports that he was planning to dismiss Federal Reserve Chair Jerome Powell, easing market concerns that Powell's removal would dent the credibility of the US financial system and the dollar's appeal as a safe-haven currency. Powell's term ends in May 2026.
Trump has been criticising Powell for not lowering interest rates and, according to media reports, was exploring the possibility of removing him.
The Fed, on the other hand, is expected to keep rates unchanged until at least September this year, even though the US Producer Price Index (PPI) remained unchanged in June.
However, the US Consumer Price Index (CPI) in June surged to its highest level since February.
On the tariff front, Trump said on Wednesday, July 16, that America was close to finalising a trade deal with India.
According to Carsten Menke, Head Economics and Next Generation Research, Julius Baer, gold is consolidating as it is missing a trigger to restart the recent rally.
"As a result of easing trade tensions and receding recession risks, safe-haven demand started to soften. Central bank buying is still sound, but not as strong as earlier in the year. We still see a longer-term favourable fundamental backdrop," Menke noted.
Pointing out silver's recent rally, Menke said its catch-up potential to gold seems to be exhausted.
"Judging by the strength of the recent rally and the decline of the gold/silver ratio to around 85, silver does not appear particularly cheap anymore in comparison to gold. When the ratio was at 100, we highlighted silver's catch-up potential, but this seems to be very much exhausted as of now. We lift our 3- and 12-month price targets to $37 and $40 per ounce, but nonetheless downgrade our view to neutral," said Menke.
Manoj Kumar Jain of Prithvifinmart Commodity Research suggests buying gold and silver on dips.
"We suggest buying gold on dips around ₹ 97,300 with a stop loss of ₹ 96,850 for the target of ₹ 98,100 and also suggest buying silver around ₹ 1,10,800 with a stop loss of ₹ 1,09,900 for the target of ₹ 1,12,800," said Jain.
"Gold has support at $3,340-3,327, while resistance is at $3,374-3,389 per troy ounce, and silver has support at $37.80-37.40, while resistance is at $38.40-38.70 per troy ounce in today's session. MCX Gold has support at ₹ 97,440-97,100 and resistance at ₹ 98,080-98,400 while silver has support at ₹ 1,10,800-1,10,000 and resistance at ₹ 1,12,400-1,13,100," said Jain.
According to Rahul Kalantri, VP of commodities at Mehta Equities, gold has support at $3,315-3,290 while resistance is at $3,360-3,380. Silver has support at $37.40-37.10 while resistance is at $38.20-38.45.
In INR, Kalantri said gold has support at ₹ 97,320-96,980 while resistance is at ₹ 97,980-98,280. Silver has support at ₹ 1,10,280-1,09,450 while resistance at ₹ 1,11,950-1,13,000.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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