Gold and silver prices today: Yellow metal struggles for direction as market braces for rate hike

Gold prices opened on the Multi Commodity Exchange (MCX) on Tuesday at Rs 59,108 per 10 grams and hit an intraday low of Rs 59,041. In the international market, prices hovered around $1,963.33 per troy ounce. Meanwhile, silver opened at Rs 74,379 per kg and hit an intraday low of Rs 74,268 on the MCX. The price hovered around $24.53 per troy ounce in the international market.

Anuj Gupta, Vice President of IIFL Securities, said, "Yesterday gold prices closed on a negative note, [down] by 0.38% at 59073 levels on the back of strengthening of the dollar. The market is waiting for the FOMC decision on interest rates. In the international market, gold trades at $1961 levels per ounce." 

He sees technically strong support at 58800 levels and then 58500 levels, Resistance at 59300 and then 59600 levels. Today, one can sell on the rise around 59300-59400 levels with a stop-loss of 59650 and for the target of 58800 to 58600 levels. Gold may test $1955 to $1950 levels in international markets.

As mentioned above, MCX Gold and Silver closed in the red yesterday. Amit Khare, Associate Vice President at Ganganagar Commodity Limited (GCL), said, "August Gold closed at 59076(-0.40%), and September Silver closed at 74096(-1.16%), Bullion's daily charts are showing profit booking,  Momentum Indicator RSI also indicating the same, So traders are advised to book profit in longs and can create fresh short positions in Gold and Silver near given residence level one with the stop loss of resistance level two and book near given support levels: Gold August Support 58900/58800 and Resistance 59300/59600. Silver September Support 73600/73200 and Resistance 74800/75400."

Gold struggled for direction as market participants braced for a widely anticipated rate hike and monetary policy clues from the U.S. Federal Reserve and other major central banks later this week.

Manav Modi, Analyst, Commodity and Currency, MOFSL, said, "The dollar index was at a near-two-week peak, while the U.S. 10Y Yield hovered around 3.8% mark. Markets have discounted a 25-bps rate hike from the Fed and the ECB. Hence, the focus will be on what Fed and ECB Governors Jerome Powell and Christine Lagarde say regarding their stance in the future policy meetings this year."

Inflation has steadied a bit but not calmed completely. While few economic data points suggest that the economy has started to take some hits, major central banks' stance on inflation and growth will also be important to focus.

"On the data front, preliminary Manufacturing and Services PMI data from major economies showed that business activity slowed, while that of Europe shrunk more than expected in July, implying that both central banks could be close to the end of their rate-hike cycles. U.S. service PMI was slightly lower, while the manufacturing PMI continued to report below the 50 mark. Focus now shifts to U.S. Consumer confidence data scheduled today, which could further trigger market volatility," said Modi.