Gold prices dropped on Tuesday, a day ahead of Akshaya Tritiya, a significant day for Jains and Hindus, traditionally marked by purchasing gold and other valuables. The decline in domestic gold prices comes amidst easing concerns over the global trade war, a strengthening US dollar, and an increasing appetite for riskier investments, all of which have weighed on gold’s appeal as a safe-haven asset.
As of 9:15 AM, MCX Gold June 5 contracts were trading 0.84% lower, priced at ₹95,219 per 10 grams. International gold prices also saw a dip as the trade tensions between the US and its global trading partners showed signs of easing, significantly reducing gold’s status as a safe haven for investors.
Reasons Behind the Drop in Gold Prices
The MCX gold price for June 5 contracts has fallen by more than ₹4,000 from its all-time high of ₹99,358 per 10 grams, which it reached on April 22. This decline follows a period of profit booking at record highs, driven by reduced concerns over the trade war, fading expectations of interest rate cuts by the US Federal Reserve, and a general slowdown in demand at elevated price levels.
Experts attribute the drop in gold prices to a combination of factors, including the opening of tariff talks between the US and multiple nations, and growing optimism regarding a potential trade agreement between the US and China. Additionally, signs of a possible Russia-Ukraine peace deal have further diminished the demand for gold as a safe-haven asset.
“Gold prices fell amid the US opening tariff talks with multiple nations and growing expectations of a possible China-US trade agreement. Optimism around a potential Russia-Ukraine peace deal further weighed on safe-haven demand for gold,” said Jateen Trivedi, Vice President of Research Analysis at LKP Securities.
Experts Advise Caution for MCX Gold Traders Ahead of Akshaya Tritiya
Looking ahead, experts predict continued volatility in gold prices in the near term, largely due to fluctuations in the US dollar index and the anticipation of key US macroeconomic data, which could significantly influence investor sentiment and the outlook for the US Federal Reserve’s interest rate decisions.
Manoj Kumar Jain of Prithvifinmart Commodity Research suggested that investors should wait for market stability before initiating new positions in gold and silver. “We expect gold and silver prices to remain volatile this week amid volatility in the dollar index and ahead of the key US macroeconomic data. We suggest waiting for some stability in the market before initiating fresh positions in gold and silver,” Jain stated.
For traders focused on MCX Gold, Jain recommended the following technical levels for today’s session:
MCX Gold Support: ₹95,350-94,600
MCX Gold Resistance: ₹96,650-97,280
Meanwhile, experts also highlighted the technical support and resistance levels for gold and silver on the international market:
Gold Support: $3,320-$3,288 per troy ounce
Gold Resistance: $3,370-$3,400 per troy ounce
Silver Support: $32.66-$32.30 per troy ounce
Silver Resistance: $33.30-$33.70 per troy ounce
Rahul Kalantri, Vice President of Commodities at Mehta Equities, offered a similar outlook, stating that gold’s support levels are at $3,310-$3,288, with resistance at $3,360-$3,378. In INR, Kalantri set the following levels for MCX Gold:
Support: ₹95,450-95,080
Resistance: ₹96,750-97,290
For silver, Kalantri identified the following levels:
Support: ₹95,680-94,850
Resistance: ₹97,150-97,950
Outlook for the Upcoming Week
As traders await key US economic data this week, including the US Job Openings and Labor Turnover Survey (JOLTS) report on Tuesday, the Personal Consumption Expenditures (PCE) index on Wednesday, and the Nonfarm Payrolls (NFP) report on Friday, gold prices are expected to remain sensitive to changes in investor sentiment and market expectations. These reports could provide crucial insights into the future trajectory of US interest rates, further influencing the gold market.
With Akshaya Tritiya just around the corner, it is likely that gold buying will increase, especially in the retail market. However, experts recommend caution, as gold prices remain volatile amidst broader economic developments. Investors are advised to stay informed about global market movements and to exercise careful consideration before making significant trades in the precious metal.
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