Gold and silver prices experienced a retreat on Friday, July 31, following a significant rally in the previous session. This decline was primarily driven by investors engaging in profit booking, a strengthening US dollar, and escalating geopolitical tensions in the Middle East.
On the Multi Commodity Exchange (MCX), domestic bullion futures saw a dip. MCX gold August futures were trading 0.5% lower at ₹1,42,547 per 10 grams. Similarly, MCX silver September futures decreased by 0.4% to ₹2,19,117 per kg during morning trade. This downturn occurred a day after both precious metals had surged over 1% in response to the US Federal Reserve's decision to maintain interest rates.
Market Dynamics and Geopolitical Factors
Market participants largely attributed Friday's weakness to profit booking after Thursday's rally. However, ongoing geopolitical risks continue to underpin safe-haven demand for precious metals. The latest escalation in the Middle East, including Jordan intercepting missiles and US strikes against Iranian targets, has heightened concerns over regional stability.
These tensions have also kept crude oil prices elevated, with Brent crude hovering near $88 per barrel. Concurrently, the US dollar index strengthened by approximately 0.4%, making dollar-denominated gold more expensive for international buyers and limiting potential gains.
US Economic Outlook and Inflation Concerns
The US Federal Reserve held benchmark interest rates unchanged at its July policy meeting. Despite this, three policymakers reportedly voted for a 25-basis-point hike, indicating persistent inflation concerns even with recent moderation in price pressures. US inflation data showed further easing, with the Personal Consumption Expenditures (PCE) Price Index falling 0.1% month-on-month in June, and annual PCE inflation moderating to 3.7%.
However, analysts caution that rising energy prices, fueled by geopolitical instability, could reignite inflation risks in the coming months.
Gold & Silver Prices India: City-Wise Rates (July 31)
Despite the futures market decline, retail gold prices across major Indian cities remained near record highs. For instance, in Delhi, 24-carat gold was priced at ₹1,39,970 per 10 grams, and 22-carat gold at ₹1,33,300 per 10 grams. Silver in the national capital stood at ₹235 per gram, or ₹2.35 lakh per kg.
- Mumbai: 24K Gold at ₹1,43,620 (10 gm), 22K Gold at ₹1,31,652 (10 gm), Silver at ₹2,19,180 (1 kg)
- Bengaluru: 24K Gold at ₹1,43,720 (10 gm), 22K Gold at ₹1,31,753 (10 gm), Silver at ₹2,19,350 (1 kg)
- Kolkata: 24K Gold at ₹1,43,430 (10 gm), 22K Gold at ₹1,31,478 (10 gm), Silver at ₹2,18,890 (1 kg)
- Hyderabad: 24K Gold at ₹1,43,850 (10 gm), 22K Gold at ₹1,31,863 (10 gm), Silver at ₹2,19,530 (1 kg)
- Chennai: 24K Gold at ₹1,44,040 (10 gm), 22K Gold at ₹1,32,037 (10 gm), Silver at ₹2,19,820 (1 kg)
Analyst Outlook and July Trend
Despite Friday's decline, gold has shown a strong performance throughout July, largely supported by safe-haven demand and global uncertainties. Ponmudi R, CEO of Enrich Money, noted that MCX Gold opened with a gap up near the ₹144,000 mark, indicating a recovery trend.
Ravi Singh, Chief Research Officer at Master Capital Services, identified ₹1,40,000 as a crucial support level for MCX gold, with ₹1,46,000 acting as immediate resistance. He emphasized a positive broader trend as long as prices remain above the support zone.
Manoj Kumar Jain of Prithvifinmart Commodity Research suggested support for MCX gold around ₹1,42,400-₹1,41,750, with resistance at ₹1,44,000-₹1,45,100. For silver, he pegged support at ₹2,17,700-₹2,16,000 and resistance at ₹2,22,200-₹2,24,500. Jain advised traders to consider booking profits ahead of the weekend, monitoring Middle East developments and upcoming US economic data for near-term price direction.