Why Are Gold And Silver Prices Falling? MCX Gold, Silver Rates Under Pressure
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Gold and silver prices fell in Indian futures trade on Wednesday, August 19, as weak spot demand and position cuts weighed on domestic prices, even as international bullion prices remained mixed during the session.
On the Multi Commodity Exchange (MCX), gold futures for October delivery fell Rs 636, or 0.41%, to Rs 1.53 lakh per 10 grams, with 837 lots traded. Silver futures for September delivery declined Rs 4,023, or 1.73%, to Rs 2.28 lakh per kg, with 2,577 lots traded.
Why Are Gold And Silver Prices Falling In India? The decline in domestic gold prices was attributed to weak spot demand, while silver came under pressure as market participants trimmed their positions.
Domestic futures can also move differently from international spot prices during the day, depending on movements in the US dollar, Treasury yields, interest-rate expectations and the Indian rupee.
Globally, gold futures were trading 0.10% higher at around $4,338.74 an ounce in New York, while silver futures gained 0.99% to $62.74 an ounce, according to a CNBC-TV18 report.
According to Kotak Neo Research, spot gold recovered from an intraday low of $4,324 to trade above $4,355, supported by easing US Treasury yields and changing expectations around the Federal Reserve’s September policy decision.
Markets are currently pricing in a 67% probability of the US Federal Reserve keeping rates unchanged in September, against a 33% probability of a rate hike, with investors awaiting the July FOMC minutes for further clues on the central bank’s policy stance.
Kotak Neo Research said lower borrowing costs and fiscal concerns remain supportive for gold, while renewed US-Iran tensions and uncertainty around the Strait of Hormuz continue to support safe-haven demand.
However, elevated oil prices could revive inflation concerns and keep global bond yields higher, potentially limiting gold’s upside. Silver slipped to $63.22 during the session, while platinum gained 0.5%.
On MCX, gold October contracts have support at Rs 1,53,590 and Rs 1,53,126, with resistance at Rs 1,55,090 and Rs 1,55,554.
For silver September contracts, support is seen at Rs 2,27,495 and Rs 2,26,217, while resistance is placed at Rs 2,31,633 and Rs 2,32,911.
Kotak Neo Research maintains a positive bias on gold, supported by softer rate expectations, geopolitical risks and fiscal concerns. However, elevated yields, a firm dollar and oil-driven inflation remain key risks that could delay monetary easing and cap further gains.
Overall, the research expects bullion fundamentals to remain moderately bullish, although volatility could stay elevated around upcoming Federal Reserve signals and the Jackson Hole symposium.
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This article is for informational purposes only and should not be considered investment advice from Kotak Neo. For compliance T&C and disclaimers, Visit www.kotakneo.com/disclaimer
Rochelle Britto has spent 8+ years decoding India's markets, businesses, and consumer economy, reporting for ET Prime and Times Internet along the way, covering the stories behind the numbers.
A Mumbai native and perpetual planner of the next holiday, she stays far, far away from the eternal question, “Where are we going next?” When she's not chasing headlines, she's chasing new cultures, open roads, and a bit of quiet in nature.
