Gold Under Pressure: Dollar's Rise Dents Yellow Metal, While Silver Shines. What's Next for Your Portfolio?

In the intricate world of precious metals, today brought a familiar dynamic: gold faced downward pressure, while silver rallied. As markets opened on Thursday, a stronger US dollar and easing global trade concerns weighed on gold, making the yellow metal less appealing for international buyers. Meanwhile, robust demand in the spot market propelled silver prices higher.

Around 9:05 AM, the August 5 contracts for MCX Gold were trading 0.30% lower at ₹97,490 per 10 grams. In contrast, the September 5 contracts for MCX Silver saw a 0.10% increase, reaching ₹1,11,748 per kilogram.

The US dollar index climbed 0.20%, directly impacting gold's appeal. A stronger dollar makes dollar-denominated commodities, like gold, more expensive for holders of other currencies, thus dampening demand. Adding to gold's woes, lingering concerns about potential tariffs seem to be easing, further reducing the need for safe-haven assets.

In other news, US President Donald Trump publicly refuted reports that he intended to remove Federal Reserve Chair Jerome Powell. This denial helped alleviate market anxieties that such a move could undermine the credibility of the US financial system and the dollar's status as a safe-haven currency. While Powell's term isn't set to expire until May 2026, Trump has been a vocal critic of the Fed's interest rate policies, advocating for lower rates despite the central bank's current stance. The Fed is widely expected to maintain current rates until at least September, even as the US Producer Price Index (PPI) remained flat in June. However, the US Consumer Price Index (CPI) saw its most significant surge since February, indicating potential inflationary pressures.

On the trade front, President Trump announced on Wednesday, July 16, that the US was close to finalizing a trade agreement with India, another factor that could reduce global economic uncertainties and, by extension, safe-haven demand for gold.

Should You Invest in Gold or Silver Right Now?

For investors pondering their next move in precious metals, expert opinions offer valuable guidance.

Carsten Menke, Head of Economics and Next Generation Research at Julius Baer, suggests that gold is currently in a consolidation phase, awaiting a new catalyst to reignite its recent rally. He notes that the easing of trade tensions and receding recession risks have softened safe-haven demand. While central bank gold buying remains strong, it's not as vigorous as earlier in the year. Despite these short-term dynamics, Menke emphasizes a "longer-term favorable fundamental backdrop" for gold.

Regarding silver, Menke believes its recent impressive rally has largely exhausted its potential to catch up with gold. With the gold/silver ratio now around 85—down from 100 when he previously highlighted silver's upside—he no longer sees it as particularly cheap compared to gold. Consequently, Julius Baer has lifted its 3- and 12-month price targets for silver to $37 and $40 per ounce, respectively, but has simultaneously downgraded its view to "neutral."

For those looking for actionable entry points, Manoj Kumar Jain of Prithvifinmart Commodity Research advises buying both gold and silver on dips. He suggests buying gold around ₹97,300 with a stop loss at ₹96,850 for a target of ₹98,100. For silver, he recommends buying around ₹1,10,800 with a stop loss at ₹1,09,900 for a target of ₹1,12,800.

Jain also provides key support and resistance levels for both metals:

Gold: Support at $3,340-$3,327 (international) and ₹97,440-₹97,100 (MCX). Resistance at $3,374-$3,389 (international) and ₹98,080-₹98,400 (MCX).

Silver: Support at $37.80-$37.40 (international) and ₹1,10,800-₹1,10,000 (MCX). Resistance at $38.40-$38.70 (international) and ₹1,12,400-₹1,13,100 (MCX).

Rahul Kalantri, VP of Commodities at Mehta Equities, offers similar insights on support and resistance levels:

Gold: Support at $3,315-$3,290 (international) and ₹97,320-₹96,980 (INR). Resistance at $3,360-$3,380 (international) and ₹97,980-₹98,280 (INR).

Silver: Support at $37.40-$37.10 (international) and ₹1,10,280-₹1,09,450 (INR). Resistance at $38.20-$38.45 (international) and ₹1,11,950-₹1,13,000 (INR).

As always, diligent research and considering your personal financial goals are crucial before making any investment decisions.