Gold prices have been on a downward trend, currently settling at ₹71,538 per 10 grams in futures trading. The decline is largely attributed to the diminishing prospects of a rate cut by the US Federal Reserve.
The latest minutes from the Fed’s policy meeting have exhibited a hawkish tone, sparking concerns that officials might delay any rate reduction. This sentiment has led to significant profit-taking among speculators, who have been trimming their holdings.
On Friday, the price of gold fell by ₹39 in futures trade, closing at ₹71,538 per 10 grams on the MCX.
The trading volume for June delivery futures stood at 7,184 lots. Analysts have pointed to weak global cues as a significant factor in the recent decline of precious metals.
Despite the recent pullback, the overall rally in gold remains robust. Jateen Trivedi, VP Research Analyst for Commodity and Currency at LKP Securities, noted that gold has faced a substantial selloff this week, dropping from ₹74,350 to ₹71,500.
This decrease of more than ₹2,800 from the weekly highs is primarily due to the reduced likelihood of an imminent rate cut by the Fed.
Trivedi emphasized that this week’s decline should be viewed as a buying opportunity, with base support at ₹69,000. Should prices fall below this level, a further selloff towards ₹66,000 could be anticipated.
Globally, gold was trading 0.15 percent higher at USD 2,363.20 per ounce in New York, as per a PTI report.
Despite this slight uptick, the sentiment around gold remains cautious. A Reuters report highlighted that while gold set a record high of $2,449.89 on Monday, it has since dropped by almost 5%.
This volatility is partly due to overseas buyers finding greenback-priced bullion less expensive as the dollar index gradually declined.
Manoj Jain, the CEO of Indore-based Prithvi Finmart, provided an optimistic outlook for gold prices. He expects global gold prices to range between USD 2,500 and USD 2,600 by the end of the year.
In the Indian market, he anticipates gold trading at ₹76,000 in the short term and reaching ₹80,000 by year-end. Jain attributes the sustained demand for gold to purchases by the central bank of China and retail buyers. He believes that the fundamentals for buying gold remain strong.
Naveen Mathur, Director of Commodities and Currencies at Anand Rathi Shares and Stock Brokers, echoed a similar sentiment. He mentioned that the upcoming US general elections in November and the persistently high inflation reduce the likelihood of a rate decrease in the near future.
This scenario could maintain pressure on gold prices. Mathur foresees the MCX July futures contract’s gold prices challenging their strong support, which is between ₹70,200 and ₹69,800 per 10 grams.
He also pointed out that the negative trend might not persist next month, given the supportive long-term fundamentals for gold.
Outlook for gold remains positive despite the recent correction. Analysts suggest that the current decline presents a buying opportunity, supported by strong base levels and sustained demand.
As international concerns and market dynamics continue to evolve, gold prices are expected to see fresh highs in the coming months.
