Gold prices remained subdued in the domestic futures market on Tuesday morning, as investor appetite shifted towards equities following a landmark trade agreement between the United States and China. The easing of global trade tensions reduced the appeal of safe-haven assets such as gold.
On the Multi Commodity Exchange (MCX), gold futures for June 5 delivery traded marginally higher by 0.06% at ₹92,955 per 10 grams. This comes after a sharp decline of nearly 4%, with prices hitting ₹92,901 per 10 grams in the previous session.
Globally, spot gold prices hovered near a one-week low after falling on Monday, reflecting waning demand as risk sentiment improved.
US-China Tariff Reductions Boost Market Sentiment
The pullback in gold prices follows an agreement between the US and China to significantly reduce tariffs on each other’s goods, signaling a de-escalation in trade tensions. After two days of negotiations in Geneva, both countries announced tariff cuts for the next 90 days. The US slashed tariffs on Chinese imports from 145% to 30%, while China reduced tariffs on American goods from 125% to 10%.
This trade pact, coming shortly after a US-UK deal, has helped ease fears of a prolonged global trade war—one of the key factors that had been supporting gold prices in recent months.
Geopolitical Tensions Ease, Dampening Gold’s Appeal
In addition to the trade deal, easing tensions between India and Pakistan further weighed on safe-haven demand. Over the weekend, both nations agreed to a ceasefire, contributing to the overall decline in geopolitical uncertainty.
“Gold and silver witnessed heavy sell-offs at the start of the week following the US-China trade agreement. The dollar index and US bond yields surged after the announcement, reducing the appeal of precious metals. The Indo-Pak ceasefire also added to the selling pressure,” said Manoj Kumar Jain, Head of Research at Prithvifinmart Commodity Research.
All Eyes on US Inflation Data and Fed Outlook
Market participants are now awaiting the release of the US Consumer Price Index (CPI) data, scheduled for later today, which will provide further cues on the Federal Reserve’s interest rate path. India’s CPI data is also due today, adding to the market’s watchlist.
Investment Strategy: Focus on Silver, Stay Cautious on Gold
Given the current market dynamics, Jain expects continued volatility in gold and silver prices, driven by fluctuations in the dollar index and evolving geopolitical factors.
“We recommend buying silver on dips while avoiding fresh gold positions for a few trading sessions,” he advised.
Jain outlined key technical levels for gold, identifying support at $3,200–$3,180 per troy ounce and resistance at $3,250–$3,274. For silver, support lies at $32.30–$32.00, with resistance at $32.94–$33.30 per troy ounce.
On the domestic front, MCX gold finds support at ₹92,400–₹91,770 and resistance at ₹93,360–₹94,000. Silver has support at ₹94,400–₹93,650, with resistance in the range of ₹96,000–₹96,650.
Echoing similar views, Rahul Kalantri, Vice President of Commodities at Mehta Equities, noted support for gold at $3,200–$3,178 and resistance at $3,255–$3,270. For silver, he pegged support at $32.30–$32.00 and resistance at $32.90–$33.20.
In Indian rupee terms, Kalantri highlighted gold support at ₹92,250–₹91,780 and resistance at ₹93,350–₹93,790. Silver support was seen at ₹94,380–₹93,550, with resistance at ₹95,950–₹96,750.
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