Gold prices on the Multi Commodity Exchange (MCX) opened on Wednesday at a lower price of Rs 58,824 per 10 grams and hit an intraday low of Rs 58,776. In the international market, prices hovered around $1,937.26 per troy ounce. Meanwhile, silver opened on Wednesday at Rs 70,347 per kg and hit an intraday low of Rs 70,302 on the MCX. The price hovered around $23.11 per troy ounce in the international market.
Anuj Gupta, Vice President of IIFL Securities, said, “Yesterday gold prices closed lower by 0.54% Rs 58,820 levels on the back of rate cut by People's Bank of China (PBOC). In the international market, it is trading at $1936 levels per ounce.”
Gold is waiting for more cues from the US monetary policy front this week.
Gupta sees technically strong support at Rs 58,700 levels and then Rs 58,400 levels, resistance at Rs 59,100, and Rs 59,500 levels. For today, one can sell around Rs 59,100–59,200 levels with a stop loss of Rs 59,500 and for the target of Rs 58,700–58500 levels. “Gold may test $1,930 levels in international markets.”
China’s central bank announced an interest rate cut following several similar measures in recent days in a bid to counter the slowdown of growth post-Covid-19. According to analysts, the PBOC offered banks 237 billion yuan ($33 billion) through the medium-term lending facility to maintain sufficient liquidity in the banking system.
Manav Modi, Analyst, Commodity and Currencies, MOFSL, said, “Gold slipped in yesterday’s session on the back of positive US housing data, a firmer dollar and US Yields, while traders looked to Federal Reserve Chair Jerome Powell's testimony on Capitol Hill for cues on the interest rate trajectory. US single-family homebuilding surged in May to its highest in over a year. The expectations were slightly lower, anticipating that high borrowing costs would deter homebuyers. However, the data suggested domestic demand was strong enough that the Fed could be tempted to raise interest rates further still in their efforts to cool inflation.”
Modi added: “Markets await Fed Chair Powell's testimony on Wednesday on twice-yearly reports to Congress on the state of monetary policy, which says inflation in key parts of the U.S. service industry remains elevated and has not shown signs of easing. Meanwhile, pressure is mounting on China's cash-strapped local governments as authorities move to shut a private funding route for their financing arms, according to planned new rules and people familiar with their aims, raising credit risks and default worries. Apart from Governor Powell's comments, inflation data from the U.K. will also be important to watch out for, as it could trigger volatility in Dollar Index.”