Gold and silver prices jumped up to 1% in early deals on the MCX on Wednesday, 12 August, supported by a positive global trend and healthy spot demand.
MCX gold October futures were 0.61% up at ₹1,54,700 per 10 grams, while MCX silver September futures were 0.89% up at ₹2,37,749 per kg around 9:10 AM.
US gold futures December contracts climbed almost 1% to $4,474 per troy ounce ahead of US inflation data for clues about the US Federal Reserve’s monetary policy trajectory, while the Middle East conflict kept the risk of oil price-driven inflation elevated.
Oil price benchmark Brent crude traded about 1% higher near $90 per barrel as Iran, as per reports, said the Strait of Hormuz will remain closed until the US agrees to its conditions. On the other hand, US President Donald Trump has said the US is ‘in total control’ of the Strait of Hormuz.
Elevated oil prices due to the Middle East conflict have raised the risk of an inflation flare-up, which could prompt the US Federal Reserve and other major global central banks to raise interest rates.
While bullion is considered a hedge against inflation, higher interest rates weigh on gold prices because it is a non-yielding asset.
Investors await the US Consumer Price Index data due today for clues on the interest rate outlook.
“With crude oil prices remaining elevated during July, expectations of a relatively firmer inflation reading have increased, which could keep bullion volatile. The immediate trend will depend on the CPI outcome and subsequent movement in the US dollar and yields,” said Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities.
The Fed kept policy rates unchanged in July but hinted that policymakers are discussing rate hikes. At this juncture, markets appear divided over the Fed’s next move in September. The Middle East conflict is expected to keep the Fed hawkish in the near future.
Gold price outlook
Jigar Trivedi, Senior Research Analyst at IndusInd Securities, believes MCX gold October contracts may appreciate to ₹1,55,000 per 10 grams amid positive global momentum.
Ravi Singh, Chief Research Officer at Master Capital Services, believes that as long as prices remain above the ₹1,52,500 support, the buy-on-dips strategy remains intact, with ₹1,56,000 as the immediate hurdle.
“A sustained breakout above this resistance could further strengthen momentum and open the way towards ₹1,58,600. The positive momentum in MCX is also supported by international gold, where prices are holding near the $4,400 mark as uncertainty over a potential U.S.-Iran agreement to reopen the Strait of Hormuz has kept geopolitical risks and oil prices elevated,” said Singh.
Read all market-related news here
Read more stories by Nishant Kumar
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.
