Gold and silver prices traded mixed on the MCX on Wednesday (29 July) morning, reflecting caution ahead of the US Federal Reserve’s monetary policy decision.
MCX gold August contracts were 0.21% down at ₹1,41,331 per 10 grams, while MCX silver September futures were 0.34% up at ₹2,16,577 per kg around 9:05 AM.
The US Fed’s policy decision is due today at 11:30 PM IST, while Fed Chair Kevin Warsh’s comments are scheduled for 12:00 AM IST.
The US central bank is widely expected to keep interest rates unchanged today, following June inflation prints that came in below expectations. However, renewed concerns about inflation spiking due to Middle East tensions may prompt the Fed to hike rates in September and in December.
According to news agency Reuters, the FedWatch tool indicates that markets see a 76% chance of a September rate hike and a 30% chance of a 25-basis-point rate hike on 29 July.
“Markets are currently pricing nearly a one-third probability of a rate increase. Expectations of tighter monetary policy have helped push the US dollar Index to a 14-month high, weighing on bullion,” Ravi Singh, Chief Research Officer at Master Capital Services, noted.
Apart from the US Fed, the Bank of England (BoE) and the Bank of Japan (BoJ) may also keep interest rates unchanged on Thursday and Friday, respectively.
Elevated interest rates are negative for gold prices, as higher rates increase the opportunity cost of holding the yellow metal, a non-yielding asset.
Meanwhile, the dollar index eased by 0.10% to 101.30, while the US 10-year bond yield climbed to 4.61% from 4.60% in the previous session.
On the geopolitical front, tensions between the US and Iran have been escalating as, according to media reports, the US military on Tuesday said it intercepted multiple ballistic missiles launched by Iran towards U.S. forces in the Middle East.
Fresh tensions drove crude oil prices higher. Brent crude traded over 4% higher near $88 per barrel around 9:30 AM.
Gold and silver prices: Key levels to watch
As per Manoj Kumar Jain of Prithvifinmart Commodity Research, gold has support at $4,010 and $3,974 and resistance at $4,070 and $4,110 per troy ounce, while silver has support at $56.80 and $56 and resistance at $58.40 and 59.10 per troy ounce in today’s session.
On the MCX, Jain said gold has support at ₹1,40,800 and ₹1,40,000 and resistance is at ₹1,42,200 and ₹1,43,100, while silver has support at ₹2,14,000 and ₹2,12,200 and resistance is at ₹2,17,700 and ₹2,20,000.
“We suggest long-term investors accumulate gold and silver in this market fall in SIP mode, and traders stay away ahead of the FOMC meeting outcomes,” said Jain.
Singh said a decisive break below ₹1,40,000 could trigger another round of selling towards ₹1,36,000, while on the upside, the 21-day EMA near ₹1,43,800 is expected to act as an immediate resistance.
“As long as prices remain below this level, the preferred strategy continues to be sell on rise,” said Singh.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. 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.
