Rupee Climbs, Gold Glistens as Dollar Weaken and Trade Tensions Linger
The Indian rupee showed a welcome boost on Monday, opening 12 paise stronger at 85.44 against the US dollar. This positive movement comes against a backdrop of fluctuating global economic conditions and market reactions.
Gold Shines Brighter
Meanwhile, gold prices jumped almost 1 percent in the morning trade on the domestic futures market, fueled by a weaker US dollar and lingering concerns about potential trade tariffs reminiscent of the Trump era. The MCX Gold June 5 contract surged 0.95 percent to Rs 93,317 per 10 grams.
A weakening dollar makes gold more affordable in other currencies, naturally boosting its demand. Rahul Kalantri, Vice President of commodities at Mehta Equities, pointed out that this trend is reflected in the current market, stating, “Gold has support at $3,195-3,175 and resistance at $3,245-3,260. Silver has support at $32.10-31.80 and resistance at $32.65-32.85.”
Adding to the gold price rally, Moody’s recent downgrade of the US sovereign credit rating due to fiscal imbalances and rising debt costs has triggered a renewed safe-haven demand for gold, pushing prices past $3,220 per ounce on Monday. This marks a rebound from last week’s significant decline, the steepest in six months.
Factors Supporting Gold Prices
Despite a temporary truce in US-China trade tensions and recent optimism, weak US economic indicators and subdued inflation have led markets to anticipate further interest rate cuts by the Federal Reserve. This expectation acts as a further catalyst for gold prices.
In the Indian rupee market, Kalantri suggests support for gold at Rs 91,850-91,480, with resistance at Rs 92,850-93,490. Silver has support at Rs 94,480-94,850 per kg and resistance at Rs 95,950-96,650.
Wedding Season Boost
While gold prices have remained relatively stable in the past two sessions due to a lack of significant market-moving events, domestic buying ahead of the upcoming wedding season in India is expected to keep prices at elevated levels and prevent a sharp decline. Aksha Kamboj, Vice President of the India Bullion and Jewellers Association (IBJA), expressed this sentiment, stating that domestic buying will ensure that the downside is capped and prices remain high.
