Gold Prices Climb on MCX Amid Value Buying, Limited by Dollar Strength and Inflation Fears

Gold Prices Climb on MCX Amid Value Buying, Capped by Strong Dollar and Inflation Concerns

On Tuesday morning, the gold rate on the Multi Commodity Exchange (MCX) witnessed a climb due to value buying following strong losses in the previous session. However, the gains were capped by a strong dollar and concerns over inflation. As of 9:10 am, MCX gold June futures traded 0.13% up at ₹1,49,526 per 10 grams, while MCX silver July futures were 0.04% down at ₹2,43,798 per kg.

The dollar index surged by nearly 0.20%, weighing on gold's demand as a stronger greenback makes the yellow metal expensive for buyers in overseas currencies. In the previous session, the gold June futures contract settled at ₹1,49,339 per 10 grams, losing over 1%, and the silver July futures contract settled at ₹2,43,895 per kilogram, falling nearly 3%. International gold prices also rose on Tuesday from a more than one-month low hit in the previous session.

However, gains were limited as crude oil prices rose again, stoking inflation fears and fuelling concerns that interest rates may remain elevated for longer. Brent Crude prices declined by more than 1%, but continued trading near $113 per barrel, shattering investor risk appetite. Tensions between the US and Iran have risen even as the possible talks between them remain stalled. According to reports, President Donald Trump on Monday warned that Iran would be “blown off the face of the Earth” if it attacked American vessels escorting commercial ships through the Strait of Hormuz.

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| Crude Oil Prices (Brent) and Gold Rate Comparison | | --- | --- | | Previous Session | Current Session | | Brent Crude: $114.30 (declined by more than 1%) | Brent Crude: $113.00 | | Gold June Futures: ₹1,49,339 (lost over 1%) | Gold June Futures: ₹1,49,526 (up 0.13%) | | Silver July Futures: ₹2,43,895 (fell nearly 3%) | Silver July Futures: ₹2,43,798 (down 0.04%) |

Crude oil prices have remained higher for over two months now. If they remain up for a longer period, it may drive inflation higher, forcing central banks to tighten their monetary policy. The US Federal Reserve, at its April policy meeting, kept the benchmark interest rate unchanged and highlighted the high risk of inflation due to the West Asian conflict. According to Reuters, traders are now largely pricing out U.S. Fed rate cuts for this year. Markets now see a 37% chance of a rate hike by March 2027.

Jigar Trivedi, Senior Research Analyst at IndusInd Securities, noted that investors' focus is now on a slew of key US data this week, including US job openings, the ADP employment report, and the April payrolls report. Trivedi expects MCX gold June futures to advance to ₹1,50,200 per 10 grams, as international prices have also rebounded.

Prithviraj Kothari, Managing Director at RiddiSiddhi Bullions, said gold is expected to trade in the range of $4,500-$4,850 (nearly ₹148,000 to ₹155,000). Silver is expected to trade in the range of $71-$80 (nearly ₹235,000 to ₹255,000). According to Manoj Kumar Jain of Prithvifinmart Commodity Research, gold has support at $4,500 and $4,470, while resistance is at $4,574 and $4,610 per troy ounce. Silver has support at $72 and $70, while resistance is at $75.50 and $77.40 per troy ounce in today’s session.

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On the MCX, Jain said gold has support at ₹1,48,400 and ₹1,47,700 and resistance at ₹1,50,100 and ₹1,50,850, while silver has support at ₹2,41,000 and ₹2,38,800 and resistance at ₹2,46,600 and ₹2,50,000.

"We suggest waiting for some stability in the markets for taking fresh positions in gold and silver; the market is expected to remain in the range ahead of the U.S. non-farm data later this week," said Jain.