Gold Shines Brighter as Geopolitical Tensions Ease and Dollar Dips

The golden glow returned to the Multi Commodity Exchange (MCX) today, as gold prices opened higher, settling a bit after a tumultuous previous session. The precious metal found its footing amidst shifting global dynamics, most notably a fragile, yet welcome, ceasefire between Israel and Iran, which seems to be dialling back safe-haven demand.

Wednesday's trading saw MCX gold futures kick off at ₹97,311 per 10 grams, marking a 0.29% increase from its prior close of ₹97,023. Silver, often seen as gold's gleaming companion, followed suit, opening 0.22% higher at ₹1,06,341 per kilogram, compared to its previous close of ₹1,06,102. As the morning progressed, around 9:10 AM, MCX gold continued its ascent, trading at ₹97,300 per gram, up by a respectable ₹277. Similarly, MCX silver pushed higher by ₹299, or 0.28%, to ₹1,05,216 per kilogram.

Internationally, the narrative for gold was much the same. Spot gold prices firmed up by 0.2% to $3,328.89 per ounce, bouncing back after Tuesday's dip to a two-week low. US gold futures also saw a gain of 0.3%, reaching $3,343.00, while spot silver held steady at $35.90 per ounce.

The tentative ceasefire announced on Tuesday between Israel and Iran played a pivotal role in this market movement. While the de-escalation of the air conflict temporarily eased the immediate "safe-haven" rush for gold, which saw MCX prices crash by 2.41% (a significant ₹2,394) in the previous session, the underlying sentiment for gold remains robust.

Today's gains are further bolstered by a softer US dollar index, which is currently hovering near a one-week low. A weaker dollar makes gold, which is denominated in the greenback, more appealing to buyers holding other currencies. Adding to this supportive environment, benchmark 10-year Treasury yields have also retreated, staying close to their more than one-month low. When bond yields offer lower returns, non-yielding assets like gold become comparatively more attractive.

Meanwhile, market participants are keeping a keen eye on the words of US Federal Reserve Chair Jerome Powell. In his recent testimony to Congress, Powell hinted that higher tariffs could potentially ignite inflation this summer – a crucial period that could sway the Fed's deliberations on potential interest rate cuts. This prospect of future rate cuts, with traders now pricing in 60 basis points of cuts for 2025 (the first potentially arriving in September), generally creates a more favorable landscape for gold. Lower interest rates reduce the opportunity cost of holding gold, which doesn't offer yields like bonds.

Expert Outlook on Gold & Silver:

Rahul Kalantri, VP Commodities at Mehta Equities Ltd., offered his insights into the technical levels for both gold and silver. For gold, he sees support at $3,300-$3,277, with resistance at $3,348-$3,365 in the global markets. On the MCX, Kalantri anticipates support for gold at ₹96,450 - ₹95,910, and resistance at ₹97,650 - ₹98,100.

For silver, global support levels are pegged at $35.50-$35.20, with resistance at $36.30-$36.55. On the MCX, silver finds support at ₹104,280 - ₹103,600, while resistance levels are at ₹1,05,850 - ₹1,06,500. Investors will be watching these levels closely as the market navigates the interplay of geopolitical events and monetary policy signals.