Gold and silver prices steady after volatile week. At what price should you buy gold

Gold prices on the Multi Commodity Exchange (MCX) opened on Monday at Rs 59,272 per 10 grams and hit an intraday low of Rs 59,251. In the international market, prices hovered around $1,956.60 per troy ounce. Meanwhile, silver opened on Monday at Rs 72,354 per kg and hit an intraday low (at the same price) of Rs 72,540 on the MCX. The price hovered around $24.06 per troy ounce in the international market.

Anuj Gupta, Vice President of IIFL Securities, said, “Last week, we observed a negative week for gold and silver. We saw the correction in gold and silver was due to the FOMC's statement on expecting to hike interest rates twice a year. But on the last trading days of the week, the ECB increased the interest rates, and we observed a sharp recovery in gold and silver prices. On the other hand, the dollar index corrected below five-week low levels.”

Last week, MCX gold prices corrected by 0.82% and closed at Rs 59,352 levels; in the spot international market, it corrected by 0.18% and closed at $1,957 per ounce. MCX Silver corrected by 1.49% and closed at Rs 72,724 levels; in the spot international market, it corrected by only 0.36% and closed at $24.18.

“Dollar index trading around 102.29 levels which is 5 weeks low levels. As the dollar index falls, we expect we may see a recovery in the gold and silver prices. Technically the trend of gold and silver is sideways to up where we suggest buying on support levels in bullion,” said Gupta.

Gold has immediate support at Rs 59,000 levels ($1,935) and then Rs 58,700 ($1,920) levels, while resistance is at Rs 59,800 levels ($1,980) and then Rs 60,300 ($2,000) levels. Gupta said, “Traders can buy gold around Rs 59,000 levels with the stop loss of Rs 58,650 levels for the target of Rs 59,800 to Rs 60,000 levels in the short term.”

Silver has immediate support at Rs 71,000 ($23) and then Rs 69,500 ($22) levels, while resistance is at Rs 74,000 levels ($25) and then Rs 76000 levels ($26). Gupta said, “We expect silver to test 74000 levels ($25) levels very soon and above $25, it may test $26 levels.”

Gold prices were steady after a volatile week, as the dollar held firm and investors assessed the path ahead for interest rates after the US Federal Reserve’s hawkish tone. The dollar index and U.S. Yields inched lower, hovering around 102.30 and 3.7%, supporting metal prices. While the US Fed paused its rate hike cycle for the first time in over a year last week, the bank still warned of the possibility of at least two more hikes this year, dimming the prospects of a recovery in gold prices. The US Fed also increased its growth forecast and overall inflation concerns.

Manav Modi, Analyst, Commodity and Currencies, MOFSL, said, “US Fed officials last week, struck a hawkish tone in their first comments since the central bank held the policy interest rate steady at its meeting last week, but signalled that rate hikes would likely resume. The tug of war between risk on and off is increasing market volatility. Markets are now pricing in a 25 basis point hike by the Fed in July, given that inflation is still trending well above the central bank’s 2% annual target. Volatility could remain a bit lower on the back of the U.S. holiday. A testimony by Fed Chair Powell before Congress is expected to provide more cues on monetary policy. Moreover, several more Fed officials are also due to speak during the week. Along with this, the focus this week will also be on the Preliminary manufacturing and service PMI data from major economies.”