Gold prices have fallen sharply in the domestic futures market, with MCX gold slipping below Rs 1,42,000 level in early trade on Friday. The yellow metal has lost over 6% in ten trading sessions, as rising crude oil prices, inflation concerns, and expectations of interest rates staying elevated weigh on bullion.
International gold prices have also come under pressure as rising oil prices have revived concerns that persistent inflation could prompt the US Federal Reserve to keep interest rates higher for longer. This has reduced the appeal of gold, which does not pay interest, compared with interest-bearing assets.
On Friday, MCX gold price declined as much as Rs 1,503, or 1.04%, to a low of Rs 1,41,806 per 10 grams. In ten trading session, the yellow metal has got cheaper by Rs 9,693, or 6.40%.
At 12:30 PM, MCX gold rate was trading lower by Rs 954, or 0.67%, at Rs 1,42,355 per 10 grams.
Why Are Gold Prices Falling?
Crude oil prices have surged above $114 per barrel amid escalating geopolitical tensions and concerns over potential supply disruptions. Higher energy prices can push inflation higher, making it harder for central banks to ease monetary policy. This has strengthened expectations that US interest rates could remain elevated, putting pressure on gold.
Elevated US Treasury yields have added to the pressure on bullion by increasing the opportunity cost of holding a non-yielding asset. A firm US dollar has also weighed on international gold prices by making dollar-denominated bullion more expensive for buyers using other currencies.
The sell-off has extended across precious metals, with silver facing additional pressure from concerns over industrial demand and global economic growth. In India, the rupee's 0.4% decline on Thursday to around 94.82 against the US dollar has provided a partial cushion to domestic gold prices by offsetting some of the weakness in international markets.
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Gold Price Outlook: Key Support And Resistance Levels
Ponmudi R, CEO of Enrich Money, said gold's near-term trend remains weak after the sharp gap-down opening. The Rs 1,43,000 - Rs 1,43,700 range is now the immediate resistance zone, while a sustained move above it could help stabilise prices. The next resistance lies at Rs 1,45,300 - Rs 1,46,000.
On the downside, Rs 1,40,000 - Rs 1,41,000 is the crucial support band. A decisive break below this range could push prices towards the next support zone of Rs 1,37,500 - Rs 1,38,300.
Momentum indicators continue to reflect selling pressure. The relative strength index, or RSI, is near 32 and approaching oversold territory, while the negative MACD histogram suggests that downward momentum remains strong. However, the oversold reading alone does not confirm an immediate recovery.
Domestic gold has shown relative resilience compared with silver and international gold prices. Silver is facing additional pressure from concerns over industrial demand and global growth, while the rupee's weakness is cushioning some of the decline in domestic gold prices. Overall, the outlook remains bearish unless gold moves decisively back above the immediate resistance zone.
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