Gold prices declined on Wednesday, May 31. On the Multi Commodity Exchange (MCX), gold futures were trading at Rs 59,968 per 10 grams, down Rs 30 or 0.05 percent. Globally, spot gold fell 0.2 percent to $1,955.28 per ounce by 0243 GMT, and lost 1.7 percent so far this month. US gold futures eased 0.2 percent to $1,954.80.

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The rates are set for a monthly drop, as progress in the US debt ceiling deal and expectations that the Federal Reserve will likely raise interest rates further eroded bullion's safe-haven status, according to news agency Reuters.

On Tuesday, gold prices managed to climb higher, gaining nearly 1 percent to end at $1959.1 per ounce. Gold prices recovered from their lowest level in more than two months as the dollar retreated from recent highs, while persistent fears about the US debt ceiling negotiations kept investors on edge and revived demand for safe-haven metal.

The trigger

An overnight decline in Treasury yields have allowed gold prices to defend its support confluence zone at the $1,940 level for now, but intermittent bounces since early-May have been short-lived, which raises the chances that it could be the same this time round as well, Yeap Jun Rong, a market analyst at IG was quoted as saying in Reuters report.

Gold prices have come off their recent near-record highs reached early in May.

The dollar index held firm, offsetting support from a decline in the benchmark U.S. 10-year Treasury yield. A stronger dollar makes gold more expensive for overseas buyers.

The outlook

Prathamesh Mallya, DVP Research, Non-Agro Commodities & Currency at Angel One Ltd expects gold to trade higher towards Rs 60,360 per 10 gm levels, a break of which could prompt the price to move higher to Rs 60,530 levels per 10 gm.

According to Rahul Kalantri, VP Commodities at Mehta Equities Ltd, gold has support at $1942-1930 per ounce while resistance is at $1964-1975 per ounce. In rupee terms, gold has support at Rs 59,710-59,550 per 10 gm, while resistance is at Rs60,220, 60,450 per 10 gm.

Investment strategy

Experts suggest selling gold futures on rise for Rs 60,000 per 10 gm with a stop loss of Rs 60,200 per 10 gm nd a target of Rs 59,600 per 10 gm.