Gold prices dip as the dollar strengthens, ending a four-week rally

Gold prices opened on the Multi Commodity Exchange (MCX) on Monday at Rs 65,348 per 10 grams and hit an intraday low of Rs 65,180. In the international market, prices hovered around $2,147.45 per ounce.

Meanwhile, silver opened at Rs 75,400 per kg and hit an intraday low of Rs 75,184 on the MCX. In the international market, the price hovered around $25.19 per ounce.

Manav Modi, Analyst, Commodity and Currency, MOFSL, said, “Gold prices inched lower, marking their first weekly drop in four on the back of a rise in Dollar index, US Yields, change in interest rate expectations and mixed economic data from the US.”

Higher-than-expected inflation maintains pressure on the Fed to keep interest rates elevated, weighing on gold.

In the previous week, US inflation and weekly jobless claims were supportive for the dollar, whereas industrial production and retail sales were reported lower, supporting bullions.

The US dollar index marked one of its largest weekly gains since mid-January, moving from ~102.60 to ~103.40; US 10-year yields also increased from 4.1% to 4.3%.

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Traders continue to bet on interest rate cuts in June, although the chances of rates easing in June are seen at 59%, compared with 72% earlier, according to the CME FedWatch Tool.

“Focus now shifts to the Fed policy meeting scheduled later this week, where the expectation is that the central bank will keep the rates unchanged, but comments from the Governor and forecasts will be important to keep an eye on," said Modi.

Amit Khare, Associate Vice President at GCL Broking, said, "April gold closed negative at 65542(-0.08%), and May Silver closed positive at 75650(0.57%). As per the daily chart, bulls are trading a mixed zone, Gold is trading at overbought zone, while Silver is looking strong; Momentum Indicator RSI also indicates the same; below are the important levels for the day: Gold April Support 65200/65000 and Resistance 65700/66050. Silver May Support 75000/74200 and Resistance 76000/76500.”