Gold Price Falls on MCX Amid Dollar's Rise, Higher Bond Yields
Gold Price Drops Amid Stronger US Dollar and Bond Yields
On Wednesday, 20 May, the MCX gold rate experienced a decline in the morning trade due to profit taking, driven by a rise in the US dollar and bond yields. The MCX gold June futures dropped by 0.60% to ₹1,58,137 per 10 grams, while the MCX silver July futures declined by 0.80% to ₹2,68,000 per kg around 9:05 am.
The dollar index hovered near its six-week high of 99.41, while the benchmark US 10-year bond yields hit a more than one-year high of 4.69%. This resulted in gold prices being weighed down by a stronger dollar, making gold denominated in dollars more expensive for buyers in other currencies. Elevated bond yields also raised the opportunity cost of holding non-yielding bullion.
However, easing crude oil prices and hopes for a potential U.S.-Iran peace capped losses for the yellow metal. Crude oil benchmark Brent crude declined by half a percent after US President Donald Trump said on Tuesday, 19 May, that the war with Iran will end "very quickly". He also claimed that Iran wanted to make a deal "so badly".
Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
Key Levels to Watch
Ravi Singh, Chief Research Officer (Research) at Master Capital Services, highlighted that gold prices are now hovering around the key psychological zone of ₹1,59,000 and ₹1,60,000, suggesting the market has entered a short-term consolidation phase following the recent vertical up-move. Singh noted that immediate support for the MCX gold price is now placed near ₹1,57,500, which aligns with the recent swing base and breakout area. A decisive close below this region may trigger extended profit-booking toward the broader support zone around ₹1,55,000.
Immediate resistance is seen near ₹1,61,000, while the bigger hurdle remains around ₹1,63,000 and ₹1,63,300, where sellers previously regained control. A sustained breakout above this range could revive bullish momentum and open room for another leg higher in the ongoing uptrend.
Technical Analysis Comparison
Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline
| Commodity | Support | Resistance |
|---|---|---|
| Gold (MCX) | ₹1,57,700, ₹1,56,650 | ₹1,60,350, ₹1,61,100 |
| Gold (International) | $4,454, $4,420 | $4,522, $4,570 |
| Silver (MCX) | ₹2,66,600, ₹2,63,000 | ₹2,74,400, ₹2,80,000 |
| Silver (International) | $72, $69.10 | $76.60, $78.80 |
According to Manoj Kumar Jain of Prithvifinmart Commodity Research, gold has support at $4,454 and $4,420, while resistance is at $4,522 and $4,570 per troy ounce, and silver has support at $72 and $69.10, while resistance is at $76.60 and $78.80 per troy ounce in today's session.
Investor Takeaway
Gold prices may be affected by the rise in the US dollar and bond yields, but easing crude oil prices and hopes for a potential U.S.-Iran peace may cap losses.
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