Gold futures on the Multi Commodity Exchange (MCX) declined by Rs 85 to trade at Rs 71,590 per 10 grams on Tuesday, mirroring a weak trend in the international market. The most-traded June gold contract started the day at Rs 71,720, but soon slipped to the day's low of Rs 71,590, before recovering slightly to Rs 71,630 at the time of reporting.
Reasons Behind the Decline
The fall in gold prices is attributed to a stronger US dollar and rising bond yields, which reduce the appeal of the yellow metal as an investment. Additionally, expectations of further interest rate hikes by the US Federal Reserve have dampened investor sentiment. Global gold prices also traded lower, with spot gold down 0.3% at $1,950.20 per ounce.
Silver Also Under Pressure
Silver futures also witnessed a decline, with the July contract falling by Rs 320 to trade at Rs 83,500 per kilogram. The metal has been under pressure due to subdued industrial demand and a stronger dollar.
On the domestic front, physical gold demand remained sluggish as buyers awaited further price corrections. Dealers offered discounts of up to $2 per ounce over the official domestic price, according to industry sources.
Market Outlook
Analysts expect gold prices to remain volatile in the near term, with key support at Rs 71,000 and resistance at Rs 72,500 per 10 grams. The trajectory of the US dollar and upcoming economic data from the US will be crucial factors to watch. Meanwhile, silver is likely to trade in a range of Rs 82,000 to Rs 85,000 per kilogram.
Investors are advised to stay cautious and consider hedging their positions amid the prevailing uncertainty in global markets.
