Gold and Silver Prices Decline Amid Reduced Geopolitical Tensions
Gold and silver prices on MCX saw a decline as safe-haven buying reduced due to easing geopolitical tensions. Gold prices for June futures fell by Rs 656 or 0.92% to trade at Rs 70,541 per 10 grams, while MCX May silver contracts dipped by Rs 710 or 0.9% to Rs 79,869 per kg.
Factors Influencing Gold Prices
The recent fall in gold prices follows the largest single-day loss in nearly two years. Additionally, the expectation of the Federal Reserve maintaining higher interest rates for a longer period has also affected gold prices. Gold, unlike other investments, does not earn interest, making it less attractive when interest rates are higher. Investors are now closely monitoring upcoming U.S. economic reports, particularly inflation data, to gauge future monetary policy decisions.
Market Reaction and Outlook
On Monday, gold and silver closed on a negative note, with gold ending Rs 1,300 down at Rs 71,522/10 grams and silver slipping Rs 2,318 or 2.7 % at Rs 81,189 per kg. In recent weeks, investors have adopted a cautious stance amid concerns about a potential escalation in the conflict in the Middle East.
In the U.S. markets, gold experienced a significant 2% drop to $2,341.9 an ounce, marking its largest daily percentage decline in over a year. However, it remains close to its record high set on April 12 at $2,431.29.
Technical Analysis and Intraday Strategy
According to Neha Qureshi, a senior technical & derivative analyst at Anand Rathi Commodities & Currencies, the June gold futures are showing a bearish engulfing candlestick pattern, indicating a potential downturn. The Relative Strength Index (RSI) has entered the overbought territory and is displaying negative divergences, further supporting a bearish outlook. Key resistance levels to watch are at 71,800 and 72,295, with support levels at 70,700 and 70,200.
Neha Qureshi’s intraday strategy involves selling MCX JUNE Gold futures at Rs 71,100 with a stop loss of Rs 71,500 and a price target of Rs 70,700. Additionally, the recommendation is to sell MCX MAY Silver futures at Rs 80,500 with a stop loss of Rs 81,500 and a price target of Rs 78,500.
Insight on Market Dynamics
It is essential for investors to remain vigilant and adapt their strategies based on market dynamics, such as geopolitical tensions, economic indicators, and monetary policy decisions. With a nuanced understanding of these factors, traders can make informed decisions to navigate the volatile precious metals market effectively.
