On July 9, 2024, domestic futures for gold exhibited a positive trend while silver futures remained on an upward trajectory.
As per recent updates, MCX gold futures for August 5 showed a gain of 0.27%, increasing by Rs 196 to reach Rs 72,529 per 10 grams. Concurrently, MCX silver futures for September 5 saw a rise of 0.85%, settling at Rs 93,397 per kilogram.
Neha Qureshi, Manager Technical & Derivatives Research Analyst at Anand Rathi specializing in Commodities & Currencies, noted that gold prices stabilized early in the trading session following profit-taking amidst a weaker US Dollar. Market sentiment remains cautiously optimistic as traders anticipate potential interest rate cuts by the US Federal Reserve in September, prompted by soft US employment figures from the previous week.
Political uncertainties in France and geopolitical tensions in the Middle East are also factors likely to bolster the price of gold, traditionally considered a safe-haven asset. Notably, recent declines in gold prices were attributed to the People’s Bank of China’s decision to abstain from purchasing gold for the second consecutive month in June.
Market watchers are focused on upcoming events such as Fed Chair Jerome Powell’s semi-annual Congressional testimony, as well as speeches by Fed officials Michael Barr and Michelle Bowman. Additionally, Thursday’s release of the US Consumer Price Index (CPI) inflation data is expected to influence market dynamics.
Internationally, Comex Gold registered a 0.36% increase, trading at $2,372 per ounce.
Yesterday, gold prices experienced a notable decline amid heightened risk appetite for more aggressive investments and profit-taking. The yellow metal had previously surged due to growing expectations of an impending interest rate cut by the Fed as early as September.
Outlook for Gold Prices
Financial markets are currently pricing in a 76% probability of a Fed rate cut in September, up from 71% last Friday according to the CME Fed Watch tool. June’s US CPI inflation is anticipated to ease to 3.1% year-on-year from 3.3% in May, while core inflation is expected to remain steady at 3.4% year-on-year. These figures will likely play a crucial role in guiding the trajectory of precious metals moving forward.
Qureshi emphasized that technically, gold’s breakout above a descending trend channel formation indicates a positive medium-term outlook, particularly if it maintains above the key 100-day Exponential Moving Average (EMA) with other momentum indicators favorably positioned.
Trading Strategy for Gold and Silver
Qureshi suggests a buy-on-dip strategy for MCX Gold futures (August contract) around Rs 72,300, with a target price of Rs 73,000 and a stop loss set at Rs 71,900. Similarly, for MCX Silver futures, a buy-on-dip approach is recommended at approximately Rs 92,600, targeting Rs 94,600, with a stop loss at Rs 91,600.
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