Gold Price Plunges Over 1% on MCX as Market Hopes for Fed Rate Cut Erode Amid Escalating US-Iran Tensions

Gold and Silver Prices Decline Amid US-Iran War and Economic Concerns

Market Update

On March 16, gold prices on the Multi Commodity Exchange (MCX) declined by more than 1% in early deals, with MCX gold April futures dropping by ₹1,800 (1.14%) to ₹1,56,655 per 10 grams. MCX silver May contracts crashed by ₹4,300 (1.7%) to ₹2,55,101 per kg.

Global Economic Factors

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The ongoing US-Iran war, which started on February 28, has driven Brent Crude prices above the $100-per-barrel mark, raising global inflationary pressures. The dollar index eased by nearly 0.20% but stayed above the 100 mark, weighing on gold prices.

US Federal Reserve Decision

The US Federal Reserve is expected to keep interest rates steady on March 18, considering the evolving geopolitical and geoeconomic situations. The Fed's decision is likely to be influenced by higher energy prices and mounting inflationary pressures, which have lowered expectations of interest rate cuts.

US Economic Growth

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The US Gross Domestic Product (GDP) increased at a 0.7% annualized rate in the fourth quarter, revised down from the initially reported 1.4% pace. The US Personal Consumption Expenditures (PCE) price index increased 0.3% in January after rising 0.4% in December, with year-on-year PCE inflation rising by 2.8%.

Technical Analysis

According to Manoj Kumar Jain of Prithvifinmart Commodity Research, gold has support at $5,015 and $4,974, while resistance is at $5,100 and $5,145 per troy ounce. Silver has support at $78.00 and $74.40, while resistance is at $84.00 and $86.40 per troy ounce.