Gold and Silver Rates: Precious metals inch higher tracking global moves; should you buy?

Domestic gold and silver rates registered mild gains on Tuesday tracking global markets, a day after their near-month contracts declined 0.5-0.9 per cent on commodity derivative exchange MCX.

At 12:25 pm, MCX gold futures (August 5) were trading higher by Rs 285 or 0.2 per cent for the day at Rs 1,55,069, having risen by as much as Rs 616 or 0.4 per cent to Rs 1,55,400 in intraday trade. MCX silver futures July 3 were quoting stronger by Rs 268 or 0.1 per cent at Rs 2,46,657 after gaining by Rs 1,299 or 0.5 per cent to an intraday high of Rs 2,47,688.

On Monday, both contracts finished a day full of wild swings mildly lower. The near-month gold contract fell by Rs 810 or 0.5 per cent to Rs 1,54,784 while silver declined by Rs 2,148 or 0.9 per cent to Rs 2,46,389.

Both metals began the week on a weaker note as strong US employment data and higher inflation estimates supported bets that the Fed may hike key interest rates this year, denting the appeal of precious metals. Typically, higher interest rates damage the attractiveness of gold and silver as non-yielding investments.

Globally, spot gold was last seen trading barely in the green at $4,331.3 per ounce while spot silver was up 0.3 per cent at $68.4 an ounce.

Earlier on Tuesday, the metals moved in the ranges of $4,313-4,351.5 and $67.4-68.6 an ounce, respectively.

The rupee began the day stronger by 20 paise against the US dollar at 95.41, supported by easing crude oil and dollar rates following a pause in US-Iran hostilities.

The dollar index – which measures strength in the American currency against six peers excluding the rupee – was down 0.2 per cent at 99.9 at the last count, off a nearly two-month peak of 100.20 this week.

• Cooling crude oil rates following Israel-Iran truce
• Easing of inflation concerns
• Safe-haven buying supporting bullion at lower levels
• Investors awaiting a key US inflation reading (weighing inflation and rate‑hike risks)
• Sustained central bank gold buying providing underlying support

Spot gold and silver are trading near their make-or-break levels of $4,343 and $69, respectively, and any moves below these levels on a weekly closing basis could lead to further weakness in both, said Manoj Kumar Jain, director and Prithvi Finmart.

“We expect gold and silver prices to remain volatile this week amid volatility in the crude oil prices and volatility the dollar index, and given the US-Iran peace deal uncertainty. Gold has support at $4,343-4,280 and resistance at $4,400-4,440 per troy ounce, while silver has support at $66.60-64.00 and resistance at $71.40-74.00 per troy ounce on Monday,” said Jain.

On MCX, support for gold appears to be at Rs 1,53,350-1,52,200 and resistance at Rs 1,55,500-1,56,650, and support for silver at Rs 2,42,200-2,38,000 and resistance at Rs 2,51,000-2,55,500,” said Jain.

Prithvi’s Jain suggests buying silver around Rs 2,38,000 for a target of Rs 2,51,000. Those who took positions on dips are now suggested to maintain a stop loss at Rs 2,39,000 and book profit around Rs 2,47,000-2,50,000 levels, he added.

(These are indicative prices collected from trusted sources. Investors are advised to check prices with their jeweller before investing/purchasing.)