Gold prices drop after strong US jobs data; experts suggest key levels for MCX Gold rate on current day

The price of gold dropped significantly in the domestic futures market on Monday morning, mirroring weak global cues and the strengthening of the dollar. The drop was exacerbated by a strong US jobs report that dashed hopes of a 50 basis point rate cut by the US Federal Reserve in November.

MCX Gold for December 5 contracts was trading 0.21% lower at ₹75,980 per 10 grams around 9:10 am.

According to Reuters, the US job gains in September were the highest in six months, with the unemployment rate falling to 4.1%. This positive data suggested that the US economy was performing well, leading to reduced expectations of aggressive rate cuts by the US Fed.

CME’s FedWatch tool now indicates a 95% likelihood of the Fed cutting rates by only 25 basis points in November.

Healthy macroeconomic indicators bolstered the US dollar, putting pressure on the price of gold. As gold is priced in dollars in international markets, a stronger US currency makes gold relatively more expensive in other currencies.

Investors are now eagerly awaiting the release of the US Fed’s minutes from its last meeting on October 9. Additionally, the US Consumer Price Index (CPI) data for September is scheduled to be released on Thursday, followed by the Producer Price Index (PPI) data on Friday.

Market participants will also be closely monitoring comments from various US Fed officials who are scheduled to speak this week.

Gold typically thrives in a low-interest-rate environment and during times of political and economic uncertainty.

At present, the escalating tensions in the Middle East are a positive factor for gold. Should the conflict between Israel and Iran intensify, it could lead to a flight to safety, boosting demand for assets like gold.

However, the diminishing hopes of a substantial rate cut and the strengthening US dollar could potentially constrain the upward movement of gold prices.

Key levels for MCX Gold today

Manoj Kumar Jain of Prithvifinmart Commodity Research foresees high volatility in gold and silver prices this week due to fluctuations in the dollar index and geopolitical tensions. However, he expects both metals to maintain their support levels of $2,600 and $30.88 per troy ounce on a weekly closing basis.

Jain stated, “Gold has support at $2,658-2,644 and resistance at $2,688-2,704 per troy ounce, while silver has support at $32.15-31.80 and resistance at $32.70-33 per troy ounce in today’s session.”

He further added, “On the MCX, gold has support at ₹75,850-75,600 and resistance at ₹76,500-76,740, while silver has support at ₹92,500-91,800 and resistance at ₹94,200-95,100.”

Jain recommended buying gold on dips around ₹75,850 with a stop loss at ₹75,500 for a target of ₹76,400, and silver around ₹92,800 with a stop loss at ₹91,950 for a target of ₹95,000.

According to Rahul Kalantri, VP of commodities at Mehta Equities, gold is projected to find support at $2,631-$2,610, with resistance at $2,662-$2,678, while silver may see support at $31.82-$31.68 and resistance at $32.35-$32.52.

In terms of the Indian rupee, Kalantri mentioned that gold could find support at ₹75,880-75,670, with resistance at ₹76,450-76,650, and silver might have support at ₹92,850-92,050, with resistance at ₹94,130-94,980.

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Disclaimer: The views and recommendations mentioned are from individual analysts, experts, and brokerage firms and not from Mint. It is advisable for investors to seek guidance from certified experts before making any investment decisions.