Gold and silver prices drop by up to 1% on the MCX as rising oil prices stoke rate hike fears | Stock Market News
Gold and silver prices declined by up to 1% in early trading on Tuesday, 18 August, due to profit-booking amid rising oil prices, which stoked fears of rate hikes by the US Federal Reserve and other major central banks globally.
MCX gold October futures were 0.55% down at ₹1,55,090 per 10 grams, while MCX silver September contracts were 1% down at ₹2,35,655 per kg around 9:25 AM.
The crude oil benchmark Brent crude traded above $91 per barrel as US-Iran talks remain stalled. According to reports, Iran is signalling a more aggressive approach, while the US has ruled out extending the ceasefire, raising concerns about potential disruptions to energy supplies through the Strait of Hormuz.
US President Donald Trump on Monday (local time) reiterated his remarks that the Strait of Hormuz is a "US territory," and Washington has "total control" in the region.
The Middle East conflict has kept oil prices elevated for most of the year, increasing the risk that inflation will remain higher for longer. This can push the US Federal Reserve to hike rates from the current levels.
While gold is considered a hedge against inflation, higher interest rates tend to weigh on gold prices because it is a non-yielding asset.
Investors' focus is now on the minutes of the Fed's July policy meeting, due to be released on Wednesday.
The US Fed's next policy meeting is on September 15-16 this year. The market expects the central bank to keep rates steady in September. However, much will depend on the July Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation gauge, which is due on 26 August. PCE inflation has been above 2% since early 2021.
Meanwhile, the US Consumer Price Index (CPI) climbed 0.1% month-on-month in July after dropping 0.4% in June. Year-on-year, the CPI increased 3.4% after rising 3.5% in June.
"Markets now see about a one-in-three chance of a September hike, with investors awaiting FOMC minutes and Fed Chair Kevin Warsh’s Jackson Hole speech," said Pinky Yadav, Commodity Fundamental Analyst at Choice Broking.
According to Manoj Kumar Jain of Prithvifinmart Commodity Research, gold has support at $4,440 and $4,400, while resistance is at $4,500 and $4,555 per troy ounce, and silver has support at $65 and $63.60, while resistance is at $67 and $68.80 per troy ounce in today’s session.
MCX gold has support at ₹1,55,000 and ₹1,54,100, and resistance is at ₹1,56,800 and ₹1,57,700, while silver has support at ₹2,36,000 and ₹2,33,300 and resistance is at ₹2,40,000 and ₹2,42,400, said Jain.
Jain suggests buying gold above ₹1,56,000 with a stop-loss below ₹1,54,800 for targets of ₹1,56,850 and ₹1,57,400, and buying silver above ₹2,39,100 with a stop-loss below ₹2,36,600 for targets of ₹2,41,000 and ₹2,43,000.
Jigar Trivedi, Senior Research Analyst at IndusInd Securities, expects ₹1,55,000 to act as support for MCX gold October contracts.
Ravi Singh, Chief Research Officer at Master Capital Services, said gold prices are sustaining above key EMAs, with ₹1,52,000 now emerging as the crucial support.
"As long as prices hold above this level, the buy-on-dips strategy remains intact, with the recent breakout indicating improving medium-term momentum," said Singh.
Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.