Gold price in India fall sharply on Monday, following global cues. On the Multi-Commodity Exchange (MCX), gold price future plunged 0.76 per cent to Rs 51,306 for 10 grams at 1620 hours on June 13. Silver price also witnessed a huge drop. The precious metal future tumbled nearly 1.50 per cent to Rs 61,015 for a kilogram on Monday.
In the international market, the yellow metal price eased after touching one-month high earlier in the session. Spot gold was down 0.6 per cent at $1,859.90 per ounce, as of 0732 GMT. US gold futures also eased 0.6 per cent to $1,864.40.
What Led to this Huge Drop in Gold Price on Monday?
The inflation in the United States rose to 8.6 per cent in May, highest in 40 years, according to the data released by the US labour department. Analysts now expect that the US Federal Reserve may aggressively increase the interest rates in the coming months to tame the inflation.”Comex gold prices advanced more than 1 per cent on Friday amid risk aversion in global markets and on higher-than-expected inflation data,” said ICICI Direct in a note.
High inflation numbers also lifted the benchmark US 10-year treasury yield and dollar index. 10-year yield rose to their highest level on Monday. Similarly, US dollar index also surged. Both these factors capped further gains in precious metal prices.
Gold Price Future Outlook: What to Expect
“MCX gold prices are expected to trade with a positive bias due to concerns over elevated inflation and geopolitical uncertainty. It is trading above the resistance levels of 50 DMA (Rs 51,315). As long as it sustains above this level, it is expected to retest Rs 52,000 levels for the day. Silver prices are expected to take cues from gold prices and may move towards Rs 63,500 levels for the day,” ICICI Direct mentioned.
“International spot and COMEX gold prices have started weaker this early Monday morning in Asian trade tracking the strength of the dollar and strengthening bond yields which continued to move higher supported by an aggressive Federal Reserve approach to combating inflation. However, downside could be capped amid mounting economic worries. Today’s range of COMEX August gold is $1841.47-1894.57,” said Sriram Iyer, senior research analyst at Reliance Securities.
“Domestic gold futures prices could start weaker this early Monday morning, tracking a weak start in the overseas markets. A weaker rupee could cap downside. Today’s range of MCX gold August is Rs 50,815-52,190,” Iyer added.
Silver Price Outlook
“International spot and COMEX silver prices have started weaker on Monday morning in Asian trade weighed down by a stronger dollar and bond yields. Today’s range of COMEX July silver is $21.437-$22.222. Domestic silver futures prices could start weaker this early Monday morning, tracking a weak start in the overseas markets. Today’s range of MCX silver July is Rs 60,760-62,590,” analyst from Reliance Securities mentioned.