Gold Prices Surge on MCX Amid US Monetary Policy Stance and Rising Crude Oil Costs

Gold Prices Rise on MCX Amid US Federal Reserve Decision

On Thursday morning, the gold price on the MCX rose due to value buying, following the US Federal Reserve's decision to maintain policy rates. However, the gains were capped as crude oil prices surged to levels last seen four years ago, raising inflation fears and diminishing the prospects of near-term interest rate cuts.

The MCX gold June futures were up by 0.25% at ₹1,49,420 per 10 grams, while the MCX silver July futures were up by 0.71% at ₹2,39,950 per kg around 9:05 am.

The US Federal Reserve, on April 29, kept the federal funds rate steady for the third consecutive policy at 3.5%–3.75%. The central bank underscored that inflation risks have increased due to higher energy prices driven by the West Asian conflict.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The S&P 500 and Nasdaq ended almost flat on Wednesday, while most Asian markets ended lower. The US dollar and 10-year bond yields jumped largely due to a sharp jump in crude oil prices. US benchmark bond yields jumped 0.25% to 4.43, while the dollar index also saw an uptick.

Crude oil prices jumped sharply amid reports of a fresh escalation in the US-Iran conflict. Brent Crude now trades above $120 per barrel, a level not seen since June 2022.

According to Bloomberg, the US Central Command has asked to send the Army's long-delayed Dark Eagle hypersonic missile to the Middle East for possible use against Iran. Besides, the US has reportedly frozen more than $344 million in cryptocurrency tied to Iran to cut off Tehran's access to global revenue streams.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Elevated energy prices have fanned fears that inflation will rise in the coming months, suggesting no rate cuts this year. According to Reuters, markets are not expecting rate cuts this year and now see a 30% chance of a hike by March 2027, sharply up from roughly 5% a day prior.

Higher interest rates weigh on gold prices because it is a non-yielding asset. Manoj Kumar Jain of Prithvifinmart Commodity Research suggested that gold has support at $4,522 and $4,470, while resistance is at $4,600 and $4,640 per troy ounce. Silver has support at $70 and $68, while resistance is at $74.40 and $76.60 per troy ounce in today's session.

MCX gold has support at ₹1,48,400 and ₹1,47,700 and resistance at ₹1,49,800 and ₹1,50,500, while silver has support at ₹2,35,500 and ₹2,33,000 and resistance at ₹2,41,000 and ₹2,44,400. Jain advised, "We suggest waiting for some stability in the markets for taking fresh positions."