The futures price of gold for October delivery on Multi Commodity Exchange (MCX) closed at Rs 1,56,281 per 10 grams on Friday (August 28), which shows a decline of about Rs 2,600 or 1.6 percent. Whereas earlier in the week on Friday (21st August), this gold had closed at Rs 1,62,438 per 10 grams, that is, in a week the price of gold on MCX has fallen by Rs 6,157 i.e. 3.79 percent.
Talking about silver, on MCX last Friday (August 28), silver for September delivery closed at Rs 2,36,704 per kg with a decline of more than Rs 4,000 i.e. about 1.7 percent. Whereas earlier in the week on Friday (August 21), this silver had closed at Rs 2,36,704 per kg, that is, in a week the rate of silver fell by Rs 9,893 i.e. 4.01 percent.
According to the Indian Bullion and Jewelers Association (IBJA), on Friday (August 28), the price of gold of 999 purity was Rs 1,59,578 per 10 grams, whereas in the previous week the rate of gold was Rs 1,60,620 per 10 grams. That means, in a week the price of gold has decreased by Rs 1,042 i.e. 0.64 percent.
At the same time, according to IBJA, on Friday (28 August) the rate of silver of 999 purity was Rs 2,43,892 per kg, whereas in the previous week on Friday (21 August) this silver had closed at Rs 2,46,630 per kg. That means, in a week the rate of silver fell by Rs 2,738 i.e. 1.12 percent.
According to experts, markets viewed July's US personal consumption expenditure (PCE) inflation data and new Federal Reserve Chairman Kevin Wersh's maiden speech at the Jackson Hole conference as signals of tight monetary policy. This led to a change in investors' expectations regarding interest rates and increased pressure on gold and silver, which are considered safe investments.
On Friday, gold futures for October delivery fell 1.63 percent to Rs 1,56,400 per 10 grams on the Multi Commodity Exchange (MCX). Whereas silver for September delivery slipped 1.66 percent and was seen trading at Rs 2,36,651 per kg.
According to India Bullion and Jewelers Association (IBJA) data, the price of 24 carat gold stood at Rs 1,59,578 per 10 grams on Friday, whereas at the beginning of the week on Monday it was at Rs 1,62,603 per 10 grams. It is clear from this that there has been a significant decline in gold prices during the week.
A sharp rise in gold was seen in the initial days of the week. Gold rose to multi-month highs on growing concerns over the devaluation of the US currency and news of possible government support for long-term US bonds. But later strong economic data changed the direction of the market.
July's PCE inflation rate in the US was recorded at 3.7 percent, which was higher than market expectations. Along with this, data related to employment and trade also indicated the strength of the American economy. This made investors feel that the Federal Reserve could keep interest rates at high levels for a long time.
After the speech of Fed Chairman Kevin Wersh, there was a big change in expectations regarding interest rates in the market. According to analysts, within minutes of his speech, gold fell to around $70 an ounce in the international market, although it saw some recovery later. Silver also gave up early gains during the week.
The sentiment has now strengthened among market participants that a US interest rate hike in September is more likely than before. This is why investors booked profits in non-interest yielding investment instruments like gold.
On the other hand, softening of crude oil prices also gave limited support to gold. Oil prices declined from recent highs after signs of diplomatic progress around the Strait of Hormuz eased some global inflation concerns.
According to technical analysis, the level of $ 4,600 to $ 4,630 an ounce is considered to be the nearest resistance zone for Comex Gold in the international market. At the same time, the area of $4,500 to $4,470 an ounce can provide important support.
In the domestic market, the area of Rs 1,59,200 to Rs 1,60,000 per 10 grams is being considered as the major resistance for MCX gold. On the other hand, the range of Rs 1,56,200 to Rs 1,55,500 is seen as the immediate support zone.
Experts believe that the direction of gold in the coming days will mainly depend on signals related to US interest rates, inflation data and Federal Reserve policy. If the US economy remains strong and the likelihood of interest rates remaining high increases, gold may remain under pressure in the near term.