Gold and silver prices today: Yellow metal edges up amid dollar relief

Gold prices opened on the Multi Commodity Exchange (MCX) on Thursday at Rs 62,436 per 10 grams and hit an intraday low of Rs 62,375. In the international market, prices hovered around $2,032.21 per troy ounce.

Meanwhile, silver opened at Rs 70,091 per kg and hit an intraday low of Rs 70,051 on the MCX. The price hovered around $22.33 per troy ounce in the international market.

Manav Modi, Analyst, Commodity and Currency, MOFSL, said, "Gold inched higher as some relief was seen in the dollar although waning bets on early U.S. interest rate cuts kept the outlook for the yellow metal uncertain."

Bets on higher-for-longer interest rates, especially following a slew of strong US economic data and hawkish comments from Federal Reserve officials supported an up-move till now in the Dollar and US Yields.

While the dollar fell slightly from three-month highs, the greenback has still been sitting on strong gains so far in 2024. Modi says, “Apart from the interest dilemma, continuous updates regarding the geopolitical tensions in the Middle East are providing a strong floor to bullion.”

A recent report suggests that the commander of an Iran-backed Militia who attacked three American soldiers in Jordan has been killed. "Markets were now awaiting more cues on the U.S. economy to guide price movements in gold. U.S. inflation data for January, due next week, is expected to offer some direction. Today's focus will be on US weekly jobless claims data," said Modi.

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Amit Khare, Associate Vice President at GCL Broking, said, "MCX Gold and Silver gave negative closing yesterday, April Gold closed at 62524(-0.10%) and March Silver closed at 70311(-0.45%), As per the daily chart, Bullions are showing now some profit booking, Momentum Indicator RSI also indicating the same, below are the important levels for the day: Gold April Support 62400/62200 and Resistance 62600/62800. Silver March Support 70000/69700 and Resistance 70700/71300."

Hedging of Gold Price Risk in the Over-the-Counter (OTC) Market in the International Financial Services Centre (IFSC)

To provide flexibility to resident entities to hedge their exposures to gold price risk efficiently, resident entities were permitted, in December 2022, to access recognised exchanges in the International Financial Services Centre (IFSC). It has now been decided also to allow them to hedge the price of gold in the over-the-counter (OTC) segment in the IFSC. This will provide resident entities more flexibility and easier access to derivative products in hedging their exposure to gold prices.

Adhil Shetty, CEO of BankBazaar, said, "When the RBI maintains the repo rate at 6.5%, it can influence gold hedging strategies in various ways. Firstly, an unchanged repo rate may signal stability in monetary policy, which could potentially reduce the appeal of gold as a safe-haven asset. Investors often turn to gold as a hedge against inflation or economic uncertainty, but if interest rates remain steady, the opportunity cost of holding non-interest-bearing assets like gold may increase."

"Conversely, if market participants were expecting a rate cut and the RBI decides to keep rates unchanged, it might lead to disappointment or uncertainty in the market, prompting investors to seek refuge in assets like gold, thus driving up its price. Investors and hedgers may need to reassess their positions and adjust their strategies accordingly based on their outlook for interest rates and the broader economic landscape," added Shetty.

Colin Shah, MD, Kama Jewelry on RBI Monetary Policy, said, “The growing geopolitical tensions remain a concern that could impact the supply chain and put pressure on commodity prices, which will eventually hamper the exports. Further, RBI’s decision to allow resident entities to hedge the price of gold in the OTC segment in IFSC will help entities safeguard themselves against price fluctuations and adverse currency movements. In terms of pricing of the yellow metal, it is expected to remain volatile in the near future, which factors like inflation trajectory, strength of the USD, geo-political scenario and any economic development in the West will further guide.”