Gold and Silver Prices Recover Amid Geopolitical Risks

Market Update

On March 20, gold prices on the Multi Commodity Exchange (MCX) jumped by 2.30% to ₹1,48,302 per 10 grams, following a decline of 5% in the previous session. The MCX silver May futures contract surged by 3.7% to ₹2,40,000 per kilogram.

Global Market Trends

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The gold price has seen significant losses this week, with US gold futures crashing by over 7%. The strengthening US dollar, driven by a sharp jump in crude oil prices, is weighing on gold's safe-haven appeal. The dollar index remained above the 100 level until Thursday, but cooled significantly on Thursday and rose by 0.20% to 99.42 on Friday.

Geopolitical Developments

The ongoing US-Iran war continues to escalate, with Tehran attacking energy-producing facilities in the Middle East. Israeli Prime Minister Benjamin Netanyahu suggested that the war with Iran might end sooner than expected. The US Federal Reserve maintained a status quo on interest rates on March 18, signaling that inflation could rise further due to geopolitical developments.

Technical Analysis

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According to Manoj Kumar Jain of Prithvifinmart Commodity Research, gold has support at $4,540 and $4,470, while resistance is at $4,664 and $4,740 per troy ounce. MCX gold has support at ₹1,41,400 and ₹1,39,500, and resistance is at ₹1,47,200 and ₹1,49,100.

Recommendations

Jain suggests that traders could use the dead cat bounce to exit their long-positions as the market trend changes to bearish for the short term. Investors are advised to continue their Systematic Investment Plans (SIPs) for a longer-term perspective.