Gold and silver prices today: Yellow metal falls 1%, weighed down by a strong dollar and rise in US yields

Gold prices opened on the Multi Commodity Exchange (MCX) on Tuesday at Rs 59,505 per 10 grams and hit an intraday low of Rs 59,480. In the international market, prices hovered around $1,945.15 per troy ounce. Meanwhile, silver opened at Rs 74,099 per kg and hit an intraday low of Rs 74,230 on the MCX. The price hovered around $24.27 per troy ounce in the international market.

Yesterday, gold prices corrected by 1.14% and closed at Rs 59,411 after the dollar index strengthened. Anuj Gupta, a market expert, said, “We noticed that positive US economy data pulled down demand for the yellow metal. Technically, prices are on support levels, and we expect short covering after yesterday’s correction."

He sees technically strong support at 59000 levels, and then at 58700 levels, and resistance at 59700 and 60000 levels. Today, one can buy on dips around 59000-59100 levels with a stop-loss of 58700 and for the target of 59600 to 59700 levels. Gold may test $1950 to $1955 levels in the international markets.

Yesterday, spot gold closed with a loss of 1.09% at $1944.25 as the US treasury yields surged and the dollar index rose. Investors are now waiting for more US-related economic data this week, which could influence the US Federal Reserve’s monetary policy stance.

The dollar index rose 0.5% to a three-week high, and US treasury yields rose as market participants positioned for the refund announcement and anticipate more economic resilience.

Manav Modi, analyst, Commodity and Currency, MOFSL, said, “In the early morning session, a slight upside was witnessed in the safe-haven asset after Fitch downgraded the country’s credit rating, citing fiscal deterioration over the next three years and growing general government debt burden. US policymakers expressed hope they can beat inflation without cratering the job market, though they also said doing so will require keeping rates high for some time. Manufacturing PMI data for major economies yesterday was reported better than expectations; U.S. job openings fell to the lowest level in more than two years in June but remained at levels consistent with tight labour market conditions.”

Focus today will be on US private payroll data; any major change could trigger volatility in metal prices.

Amit Khare, Associate Vice President at GCL Broking, said, “October Gold closed at 58939 (-1.05%) and September Silver at 73943 (-1.95%). Bullion's daily charts are now looking attractive. Good upside movement is possible soon. Momentum Indicator RSI also indicates the same. So, traders are advised to make fresh buy positions in gold and silver near the given support level one with the stop loss of support level two and book near the given resistance levels: Gold August Support 58850/58500 and Resistance 59150/59300. Silver September Support 73700/73000 and Resistance 74700/75200."

Praveen Singh, Associate V.P., Fundamental Currencies and Commodities at Sharekhan by BNP Paribas, said, “Gold is expected to be volatile amid thin liquidity. The upcoming US ISM non-manufacturing and nonfarm payroll report for July will be crucial for the metal.”

Global rating agency Fitch, which kept the US government’s credit on a negative watch list in May, has downgraded the its credit rating to AA+ from AA. The agency cites anticipated fiscal deterioration over the next three years and a growing general government debt burden. Some funds are required to hold only AAA bonds. The development somewhat supports the yellow metal, though the recent reaction is primarily muted in the financial markets. The Biden Administration has strongly opposed the rating agency's move.

Singh further said, “As per the World Gold Council, gold buying by central banks slowed in Q2 to 102.9 metric tons compared to last year’s 158.6 metric tons, though the central banks’ buying in the first half of 2023 amounted to 386.9 metric tons, which is the highest since 2000.”