Gold Prices Fall 0.5% on MCX as Dollar Gains, Silver Down Over 2% Amid Profit Booking

Gold Prices Plummet Amid US-Iran Tensions and Crude Oil Price Rebound

The gold price dropped by over half a percent and silver crashed more than 2% in early deals on the Multi Commodity Exchange (MCX) on Thursday, 23 April, following a rebound in crude oil prices and reports of fresh tensions between the US and Iran. The US dollar index climbed by 0.15%, weighing on gold prices, after Brent Crude prices jumped by 2% to trade above $103 a barrel.

The spike in crude oil prices drives the demand for dollars higher as the commodity's global trade mostly takes place in greenbacks. The fate of the US-Iran conflict remains shrouded in uncertainty, with fresh reports suggesting the US military has intercepted at least three Iranian-flagged tankers in Asian waters, and Iran seized two ships in the Strait of Hormuz on Wednesday. The potential second round of peace talks between the two countries did not take place as neither side showed up for talks in Pakistan.

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According to a Reuters poll of economists, the US Fed may delay interest rate cuts for at least the next six months due to the inflationary risks and dimmed prospects of rate cuts by the US Fed over the next few months. The US-Iran conflict has exerted pressure on gold prices, as it drove the dollar up and weakened expectations of interest rate cuts. Domestic spot gold prices, as per MCX, have fallen more than 4% since the beginning of the US-Iran war on 28 February this year.

However, the yellow metal remains among the best-performing asset classes this year. Year-to-date, spot gold prices in India have gained 14% after surging 75% last year, as per MCX data. In comparison, equity benchmark Nifty 50 has declined 7% so far this year.

According to Manoj Kumar Jain of Prithvifinmart Commodity Research, gold has support at $4,720 and $4,681, while resistance is at $4,785 and $4,818 per troy ounce, and silver has support at $76 and $74, while resistance is at $79.80 and $81.40 per troy ounce in today's session. On the MCX, gold has support at ₹1,51,500 and ₹1,50,650 and resistance at ₹1,53,650 and ₹1,54,700, while silver has support at ₹2,45,500 and ₹2,42,000 and resistance at ₹2,51,200 and ₹2,54,800, said Jain.

According to Ponmudi R, CEO of Enrich Money, for MCX gold, a sustained move above ₹1,55,000 could revive momentum toward ₹1,57,000-₹1,58,000. On the downside, a break below ₹1,52,000 may lead to a corrective move toward ₹1,51,000-₹1,50,000 and further to ₹1,48,000. "The bias remains cautious, with macro factors offering limited support; however, failure to break above resistance levels may keep momentum weak and tilt the trend further to the downside," said Ponmudi.

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