Perspective on Gold and Silver by Ashish Rajodiya, Head – Commodities, PL Capital
Below the Perspective on Gold and Silver by Ashish Rajodiya, Head – Commodities, PL Capital
Gold and silver bounced back on Wednesday, with MCX gold at Rs1,51,850 per 10 grams, up Rs1,040, and MCX silver at Rs2,35,421 per kg, up Rs 3,303, as bargain hunting and short covering set in after a three-week selloff in both metals. That selloff was driven by last week's hotter-than-expected US inflation data — headline CPI rose 0.4% month-on-month and held at 3.4% annually — which all but sealed the case for the Federal Reserve to raise rates by 25 basis points at today's meeting, with the CME FedWatch tool pricing the move at around 90-93% probability. Higher inflation typically pushes central banks toward tighter policy, and the resulting rise in US Treasury yields to near 5% has been the key headwind for non-yielding metals like gold and silver over the past three weeks.
Gold had touched a low of Rs 1,49,771 on Tuesday before support-based buying emerged, and it now has support at Rs 1,49,500 and Rs 1,46,000, with resistance at Rs 1,54,500 and Rs 1,57,000. Silver recovered sharply from its support zone near Rs 2,27,900, which now holds as immediate support, followed by Rs 2,23,000, while resistance is placed at Rs 2,40,000 and Rs 2,45,000.
With the rate hike itself largely priced in, the market's attention now shifts to the Fed's tone on future policy. If today's statement signals more hikes ahead to keep tackling inflation, these support levels could be tested again; a more cautious tone on the pace of further tightening could extend today's recovery.
Above views are of the author and not of the website kindly read disclaimer
