Gold and silver prices were in tight range on Friday, May 19. On the Multi Commodity Exchange (MCX), gold futures were trading at Rs 59,863 per 10 gm. Silver futures were trading at Rs 72,490 per kg. Globally, gold prices were on course for their biggest weekly drop in 3-1/2 months as hopes for a resolution in the US debt ceiling negotiations and fading expectations of a rate cut by year-end took some shine off bullion, according to news agency Reuters.

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Spot gold was flat at $1,958.29 per ounce by 0231 GMT, and was set for a 2.6 percent weekly drop - its biggest since early February

On Thursday, both metals had hit their multi-week lows. According to Rahul Kalantri, VP Commodities at Mehta Equities Ltd, the optimism over the easing on the US debt ceiling hangover acted as negative for precious metals. US macro data, which showed that initial jobless claims fell to 242K last week and the Philly Fed Manufacturing Index improved to -10.4 in May from -31.3 previous, also put pressure on metals.

The outlook

As per Kalantri, gold has support at $1944-1930 per ounce while resistance is at $1972-1984 per ounce. Silver has support at $23.35-23.20 per ounce, while resistance is at $23.72-24.90 per ounce. In rupee terms, gold has support at Rs 59,510-59,380 per 10 gm, while resistance is at Rs 59,840 - 60,080 per 10 gm. Silver has support at Rs 71,550-71,120 per kg, while resistance is at Rs72,850–73,420 per kg.

Investment

According to Reuters, the dollar index is hovering close to a near two-month high, making gold less affordable for overseas investors. Two Fed policymakers said US inflation does not look like it is cooling fast enough to allow the central bank to hit pause on the interest-rate hike campaign.

US Fed Chair Jerome Powell is slated to speak at an event later in the day, and traders will scan for policy signals.

If Powell pushes back rate-cut expectations and hints at higher for longer rates than the market thinks that will be "negative for gold again," lya Spivak, head of global macro at Tastylive was quoted as saying in a Reuters report.

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However, for diversification purposes, one can still invest in gold. Experts say that the current outlook for MCX gold prices is moderately bearish, given the recent developments in the US economy. Hence, the long-standing rule now should be to keep gold at 5 percent to 10 percent in an investment portfolio.

First Published:May 19, 2023 11:24 AM IST