The precious metals have seen a sharp downward move in early Asian trade. Spot Gold rates have fallen below the $5,000/oz mark, while spot silver is trading below the psychologically important $80/oz. The prices are down over 2% in early Asian trade.
Gold slides below $5,000/oz levels
Gold fell 1% on a firm dollar amid thin trade across Asia on account of the Lunar New Year holidays. The US dollar index rose 0.2% against a basket of currencies, making greenback-priced bullion more expensive for holders of other currencies. Mainland Chinese, Hong Kong, Singapore, Taiwan and South Korea markets are closed for the Lunar New Year holidays.
Speaking on the gold’s movement, Jigar Trivedi, Senior Research Analyst at IndusInd Securities, highlighted that, “Softer-than-expected US inflation data released last Friday boosted expectations for further monetary easing by the Federal Reserve this year. Traders are currently pricing in slightly more than two rate cuts, with July seen as a potential starting point.”
“Investors are now awaiting the Fed’s meeting minutes, the advance estimate of US GDP, and PCE inflation data for clearer guidance on the policy outlook. Geopolitical developments also remain in focus. US-Iran nuclear talks are set to resume later today amid elevated tensions, while negotiations between Russia and Ukraine are also scheduled to begin against the backdrop of ongoing fighting,” he added.
Based on the global developments, he expects “MCX Gold April Futures to drop to Rs 154,000/10 gm as the undertone is mildly weak in the US markets.
Silver sees sharp slide in holiday-shortened session
Silver rate today dropped over 2% to below $76/oz as liquidity remained subdued amid market holidays in China, Hong Kong and other parts of Asia.
Jigar Trivedi, Senior Research Analyst at IndusInd Securities, pointed out that, “Chinese traders had driven a speculative surge in precious metals in January before the dramatic reversal, prompting authorities to curb market risks through various measures.
Silver surged to a record above $120 per ounce in late January, then tumbled to roughly $64 earlier this month as leveraged positions were unwound, and investors liquidated holdings to cover losses elsewhere. With US markets back open, attention now shifts to the latest minutes from the Fed and the core PCE price index for clearer signals on the monetary policy trajectory, said Trivedi.
He believes that the markets are currently pricing in a rate cut in July, with a strong probability of an earlier move in June and expects “MCX Silver March prices may decline to Rs 235,000/kg amid a weak sentiment in the global markets.”