Gold Prices Crash: Correction or End of Uptrend? (₹3300 Drop from Peak)
Gold prices on the MCX saw a decline for the second consecutive week as tensions between Iran and Israel eased and speculation about a rate cut by the US Federal Reserve diminished in the near future. The June 2024 gold futures contract on the MCX closed at ₹70,677 per 10 grams, marking a weekly decrease of ₹809 per 10 grams compared to the previous Friday’s closing price of ₹71,486 per 10 grams.
Despite this, the current MCX gold price stands approximately ₹3,300 per 10 grams lower than its peak of ₹73,958, which was reached on April 12, 2024. Spot gold prices concluded the week at $2,301 per ounce, experiencing a weekly drop of about $48 per ounce from the previous Friday’s close of $2,349. Following this, spot gold prices corrected approximately $148 lower from their all-time high of $2,448.80 per ounce. Meanwhile, COMEX gold prices settled at $2,310 per troy ounce.
CONTENTS: Gold Prices Crash
What’s Crushing Gold Prices? Fed Rate Hikes, Fading Tensions, and Strong US Data!
Gold rates are being influenced by several factors today. Anuj Gupta, Head of Commodity & Currency at HDFC Securities, noted that one reason for the decline in gold prices is the growing concern that the US Federal Reserve may delay interest rate cuts due to ongoing inflation risks.
Recent data showing a significant surge in labor costs, the highest in a year, has added to this pressure on gold prices. Additionally, the safe-haven appeal of gold has diminished following reports of a potential ceasefire between Israel and Hamas, further impacting gold prices.
Gold Prices Crash as traders reacted to the latest FOMC policy decision, focusing on the narrative of “higher for longer” rates, indicating potentially only one rate cut this year. The weekly US job data, performing better than expected, and the preliminary 1Q unit labor costs surpassing forecasts at 4.70% versus the expected 4%, continue to indicate inflationary pressures in the US economy.
Additionally, March’s factory orders excluding transportation exceeded expectations at 0.50%, while durable goods orders for March matched forecasts. The forthcoming US non-farm payroll report and ISM services data are significant for gold movements. US yields experienced a decline as a result of a substantial buy of 7000 contracts in five-year bonds, easing downward pressure. The US Dollar Index also fell as yields dropped amidst a risk-on environment.
Gold Prices Might Dip More: Strong Jobs Data, Less Rate Cuts
With the US non-farm payroll data in focus, Praveen Singh from Sharekhan by BNP Paribas anticipates continued pressure on gold prices.
He emphasized that gold remains weak as geopolitical tensions are under control, and the likelihood of multiple rate cuts has decreased. Singh expects gold prices to decline further, although he believes the downside will be limited due to the recent positive but below-market-estimate US non-farm payroll data released yesterday.
Anuj Gupta from HDFC Securities commented on the latest US job data, stating that the US reported positive non-farm payroll data for April 2024, albeit below market estimates. The market had anticipated a rise of 2.43 lakh in non-farm payrolls, but the actual data released on Friday indicated an increase of 1.75 lakh in non-farm payrolls.
Expert Advice: Hold Off on Buying Gold, Prices Might Fall Further
Anuj Gupta provided insights on the current gold rate, highlighting key levels to monitor. According to him, the Comex spot gold price is supported at $2,266 and $2,237, with resistance levels at $2,322 and $2,345. Similarly, for MCX Gold June futures, support levels are observed at ₹70,080 and ₹69,580, while resistance levels are at ₹70,950 and ₹71,700.
Anuj Gupta advised positional investors to exercise patience before entering the market. He suggested that gold prices are expected to undergo further correction from their current levels. Gupta recommended considering a long entry position at the $2250 to $2265 range, emphasizing that this level offers a favorable risk-reward ratio.
Disclaimer: Please note that the opinions and suggestions mentioned above are the personal views of individual analysts or brokerage firms and do not represent the views of TimesWordle.com. We highly recommend that investors seek advice from certified experts before making any investment decisions to protect their interests.
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