Gold prices have fallen by 1.45% for the week due to a stronger US dollar and concerns over potential interest rate hikes in the US. On the Multi Commodity Exchange (MCX), gold futures contracts for April 2023 closed at Rs 55,416 per 10 grams, down from the all-time high of Rs 58,847 per 10 grams. In the international market, gold prices fell by 1.68%, dropping from $1,841 to $1,809 per ounce over the last week. The US dollar continued to strengthen, reaching 105.19 at the close of the market on Friday.
Experts in the commodity market have stated that the previous support in gold prices was at around $1,820, and an immediate support in the international spot market lies between $1,785 to $1,780.
Gold prices are also affected by high lending costs from the US central bank, making bullion investments more expensive. Other factors such as the Russia-Ukraine conflict and geopolitical tensions may also impact gold prices.
Sanjay Asthana of Enrich Investments explained that gold prices have declined due to the Federal Reserve’s monetary policy tightening, as the minutes from the Fed’s February meeting indicate that a majority of its monetary policy committee members are in favor of raising interest rates this year.
As gold does not generate interest, any economic upheavals in countries like the US can affect the international rate of gold. The rise in core inflation in the US has led to an increase in the dollar index, causing investors to prioritize saving dollars.
Asthana predicts that while gold prices are currently experiencing a corrective rally, further downside may continue. In the international market, prices broke an important support level at $1,820 per ounce and may find new support at $1,785-$1,780 per ounce. In terms of the rupee, gold is expected to have support at the 54,500 per 10 gram level and resistance up to 56,000 in the next week.