Gold Prices Decline Amid Improved Risk Sentiment
The price of gold, often seen as a safe haven asset, has experienced a significant drop in recent trading sessions, reaching a five-month low. This decline comes as global sentiment improves due to reduced geopolitical tensions and tariff concerns. Analysts suggest that gold prices may undergo some short-term adjustments following a rapid rise over the past year.
On Thursday, May 15th, gold prices on Comex fell to $3,150 per ounce after a 2% decrease in the previous session. In domestic markets, the MCX June Gold contract decreased by 1.5%, reaching Rs 90,890 per 10 grams, extending losses from earlier trades. Silver also saw a more substantial decline, with the MCX July silver contract dropping to Rs 93,800 per kilogram, down 1.7%.
The easing of global trade tensions has led to decreased demand for safe haven assets. The US and China have agreed to substantial tariff reductions and implemented a 90-day suspension to finalize a broader agreement. However, President Trump has indicated that negotiations with India, Japan, and South Korea are ongoing, according to Ziger Tridevi, a senior analyst at Reliance Securities.
Reducing geopolitical risks has contributed to a sense of stability, particularly between India and Pakistan. There is growing optimism that Trump might lift sanctions on Syria during his upcoming visit to the Middle East, Tridevi added.
Meanwhile, China’s interest in gold is shifting from physical demand to investment demand, despite ongoing geopolitical challenges. The dollar index remains steady, hovering below the 101 mark, while the USDINR has climbed back above 85, as noted by Manav Modi, senior commodity research analyst at Motilal Oswal Financial Services.
Additionally, weaker-than-expected inflation data from the US has bolstered expectations for potential interest rate cuts by the Federal Reserve, favoring non-traditional assets. Traders are currently awaiting US PPI and retail sales data for further insights into the economic policy outlook.
Regarding price levels, it appears that resistance could be seen around $3,195 to $3,210, while support may lie between $3,120 and $3,070. In the MCX market, resistance levels are identified at Rs 92,350 and Rs 92,600, with support at Rs 90,500 and Rs 89,700. The gold market may be poised for an extended corrective movement.
