The precious metals market experienced significant turbulence as both gold and silver prices declined sharply, losing over 2% of their value in recent trading sessions. This downward movement comes as investors worldwide brace for crucial US inflation data that could reshape monetary policy expectations.
Market Performance Overview
On the Multi Commodity Exchange (MCX), gold futures witnessed a substantial drop, with June contracts falling by 2.15% to settle at ₹71,209 per 10 grams. The silver market faced even steeper declines, with July contracts plunging 2.73% to ₹87,180 per kilogram. This bearish trend reflects growing investor caution ahead of economic data releases.
Global Market Pressure
International markets mirrored this downward trajectory, with spot gold prices dropping 0.8% to $2,341.86 per ounce. The strengthening US dollar, which gained 0.1% against major currencies, added additional pressure on dollar-denominated precious metals. Market analysts attribute this cautious stance to the upcoming US Personal Consumption Expenditures (PCE) price index data, the Federal Reserve's preferred inflation gauge.
Expert Analysis and Price Targets
According to market experts, the current correction represents a healthy market adjustment after recent rallies. "The decline in gold and silver is primarily driven by profit-booking ahead of key US economic data," noted Anuj Gupta, Head of Commodity & Currency at HDFC Securities.
Technical analysis suggests specific support and resistance levels that traders should monitor closely:
- Gold Support: ₹70,800 - ₹71,000 levels
- Gold Resistance: ₹71,800 - ₹72,000 range
- Silver Support: ₹86,500 - ₹87,000 zone
- Silver Resistance: ₹89,000 - ₹90,000 band
Market Outlook and Trading Strategy
The short-term direction for precious metals largely depends on the upcoming US inflation readings. Higher-than-expected inflation could strengthen the dollar further, potentially pushing gold and silver prices lower. Conversely, softer inflation data might revive hopes for Federal Reserve rate cuts, providing support for bullion prices.
Market participants are advised to adopt a cautious approach, with experts recommending buying on dips near support levels. The broader uptrend for gold and silver remains intact, but volatility is expected to continue until clearer signals emerge from US economic data and Federal Reserve commentary.
Long-term Prospects Remain Strong
Despite the current correction, fundamental factors supporting precious metals remain robust. Central bank buying, geopolitical tensions, and ongoing economic uncertainty continue to provide underlying strength to gold and silver markets. Investors with longer time horizons might view these price dips as potential buying opportunities in an otherwise bullish market structure.
