Gold Prices Drop Below ₹74,000 on MCX Amid Strong Dollar; Silver Prices Also Fall Sharply

Mumbai, 14th Nov 2024 : Gold prices in India took a hit on Thursday, with MCX (Multi Commodity Exchange) gold rates slipping below the ₹74,000 mark per 10 grams. This decline aligns with international market trends, where the yellow metal reached a two-month low amid a strengthened US dollar. Silver also experienced a significant drop, sliding by over 1%, driven by bearish trends in the bullion market.

As of 9:05 AM, MCX gold traded at ₹73,873 per 10 grams, marking a ₹609 drop or a 0.82% decline from the previous session. Concurrently, MCX silver rates were down by ₹1,067, or 1.20%, bringing the price per kilogram to ₹88,130.

Globally, gold prices displayed signs of flat trading following a steep dip. Spot gold remained steady at $2,573.73 per ounce, maintaining its lowest level since mid-September, while US gold futures registered a 0.3% decline at $2,578 per ounce, according to Reuters.

The strengthening of the US dollar has been a key factor in this decline. The US dollar index, which measures the dollar’s performance against a basket of six major global currencies, edged up by 0.1% to 106.55. It even briefly hit 106.56, marking the highest level since November of last year, reinforcing pressure on gold prices.

Ajay Kedia, Director at Kedia Advisory, commented on the trend, saying, “Gold prices saw a gap-down opening due to the rising dollar and bond yields. The international market shows gold prices breaking crucial support at $2,585 and trending toward the $2,550 level. The overall sentiment for gold remains bearish ahead of key economic data from the US.”

In terms of support and resistance levels, Kedia noted that MCX gold has support at ₹73,500, with a resistance level at ₹75,600. In the international markets, gold is expected to find support at $2,550, with resistance around $2,610.

Inflation and Economic Data Add to Uncertainty

Adding to the uncertainty is recent data on US inflation, which rose in line with expectations for October. This increase could result in the Federal Reserve scaling back on anticipated interest rate cuts for 2024, creating further bearish pressure on the yellow metal. With inflation stabilizing, the Fed may opt for fewer cuts, which could sustain the dollar’s strength, keeping gold prices under pressure.

Investors are also closely watching the release of the US Producer Price Index (PPI) and the weekly jobless claims report, both due later in the day. Additionally, market participants are anticipating remarks from Federal Reserve Chair Jerome Powell, whose comments are expected to provide more insight into the Fed’s monetary stance.

Global Market Trends Impacting Domestic Prices

India’s domestic gold and silver prices are highly susceptible to global cues. A robust US dollar often diminishes demand for dollar-denominated assets like gold and silver, as these metals become more expensive for holders of other currencies. With rising US bond yields and stronger-than-expected economic indicators, investors continue to favor the dollar, impacting gold’s traditionally safe-haven appeal.

This decline also reflects concerns about global economic stability, with many investors diverting attention to US Treasuries over gold. Market analysts suggest that until the economic outlook shows more clarity, gold prices may remain on the defensive.

For Indian investors, tracking these international trends is essential, as they significantly impact MCX prices. In the coming weeks, factors such as US economic data, Federal Reserve updates, and bond market performance will likely continue influencing gold and silver prices.

Outlook

With MCX gold hovering near the ₹74,000 level, market watchers and investors alike remain vigilant regarding future price movements. Should the US dollar continue its upward trend, combined with inflationary pressures and economic data reinforcing the Federal Reserve’s cautious stance, gold may face sustained resistance, with prices possibly testing lower support levels.

As such, the near-term outlook for gold prices leans bearish, especially if the US economic landscape signals fewer rate cuts ahead. Investors looking for signs of recovery should keep a close eye on key levels, including the international support around $2,550 and domestic support near ₹73,500 for MCX gold.