Prices for gold and silver futures contracts in India moved higher on Tuesday, extending their gains from the previous session. The upward trend was primarily fueled by positive signals from international markets and growing expectations that the US Federal Reserve might reduce interest rates later this year.
Market Performance and Key Levels
On the Multi Commodity Exchange (MCX), the most active gold futures contract for delivery on June 5 saw a significant increase. The contract opened stronger and traded at an intraday high of ₹73,400 per 10 grams. This represented a notable gain from its previous close.
Similarly, silver futures demonstrated even stronger momentum. The July silver contract on MCX surged past the ₹94,000 per kilogram mark during the trading session. This impressive rally in silver outpaced the gains seen in gold, highlighting robust investor interest.
Drivers Behind the Rally
The primary catalyst for the rise in precious metals was a weaker US Dollar Index (DXY). The dollar's decline makes gold and silver, which are priced in dollars globally, cheaper for holders of other currencies. This typically stimulates demand and pushes prices up.
Concurrently, benchmark US 10-year Treasury yields softened. Since gold offers no yield, lower interest rates on bonds like Treasuries make the non-yielding bullion more attractive to investors. The market sentiment was buoyed by comments from Federal Reserve officials, including Neel Kashkari, who suggested that rate cuts in 2024 remain a possibility depending on inflation data.
In global markets, spot gold traded firmly above the $2,350 per ounce level, while spot silver hovered around $28.50 per ounce. These strong international benchmarks directly influenced domestic futures prices in India.
Expert Analysis and Domestic Factors
Market analysts pointed out that the bullish trend is supported by a combination of geopolitical tensions, central bank buying, and the anticipated shift in the Fed's monetary policy. The expectation of rate cuts is seen as a major long-term supportive factor for precious metals.
Domestically, the physical market in India saw moderate activity. Dealers reported a slight premium on official gold prices over the domestic benchmark. This premium indicates steady, though not overwhelming, demand from local jewellers and retailers.
The support level for the MCX June gold contract is now identified around ₹72,800, with resistance near ₹73,600. For silver, the support is placed at ₹92,800, and resistance is seen at the ₹95,000 level. Traders are advised to monitor the US dollar's movement and upcoming economic data for further direction.
In summary, the Indian bullion futures market rode a wave of global optimism. The twin forces of a weaker dollar and rising hopes for an easing US monetary policy cycle provided a firm foundation for the day's gains in both gold and silver contracts.
