Rs 2,700 rally in gold price; should investors take money off the table?

Gold prices traded higher on Wednesday. The rally was supported by a weaker US dollar and softer crude oil prices. Silver outpaced gold in both domestic and global markets.

MCX gold gains nearly 2 per cent

At around 2:47 pm, on the Multi Commodity Exchange (MCX), gold futures for June 5 delivery traded at Rs 1,52,449 per 10 grams. This marked a rise of Rs 2,696, or 1.8 per cent, from the previous close of Rs 1,49,753.

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During the session, gold touched an intraday high of Rs 1,52,885. The day’s low stood at Rs 1,51,653. Even the low was higher by about Rs 1,900, or 1.26 per cent compared to the previous close.

Global cues support precious metals

In international markets, gold and silver ended Tuesday on a positive note. Gold June futures settled at $4,568.50 per troy ounce, up 0.78 per cent. Silver July futures closed at $73.581 per troy ounce, gaining 0.08 per cent.

Domestic markets also mirrored the trend. Gold June futures settled at Rs 1,49,753 per 10 grams, up 0.28 per cent. Silver July futures ended at Rs 2,44,316 per kilogram, rising 0.17 per cent.

The rebound follows a sharp fall earlier this week. Prices recovered as the dollar index and crude oil saw profit booking.

US-Iran developments, data in focus

Manoj Kumar Jain, Director, Head Commodity and Currency Research at Prithvi Finmart Pvt Ltd, said gold and silver are inching up after profit taking in crude oil prices and easing US-Iran tensions. He added that the trend remains volatile.

He said comments from the US President indicating progress towards a deal with Iran have led to heavy profit booking in crude oil. This has pulled down the dollar index and US bond yields, supporting precious metal prices.

He also noted that the US JOLTS job openings data signalled fewer job additions, which could further support gold and silver.

Outlook: volatility likely to persist

Jain said high price volatility is being seen in both metals. He expects silver to hold support near $68 per troy ounce and gold near $4,440 per troy ounce on a closing basis this week.

He said for the day, gold has support at $4,535–4,500 and resistance at $4,622–4,681 per troy ounce. Silver has support at $72–70 and resistance at $75.50–77.40.

On MCX, he placed gold support at Rs 1,49,100–1,48,400 and resistance at Rs 1,50,500–1,51,800. Silver support is seen at Rs 2,41,400–2,38,800, while resistance is at Rs 2,48,000–2,51,500.

Jain suggested booking profits in gold and silver on every rise until there is clarity on the US-Iran deal.