Gold prices have soared to new heights, setting record after record this year, despite the strength of the US dollar. The surge has been particularly pronounced over the past two months, defying conventional expectations and unnerving investors.
On the Multi Commodity Exchange (MCX), gold for June 2024 expiry climbed to a new peak of ₹71,080 per 10 gm, while the silver rate hit a new lifetime high of ₹82,064 per kg. Internationally, spot gold reached $2,354 per ounce, and silver touched $28.08 per ounce during morning trading.
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Surprisingly, the US dollar rates also rose in the early morning session, with the US dollar index gaining 0.05 percent and hovering close to $104.50 levels. This unexpected trend of both the US dollar and gold rates moving in the same direction has puzzled market observers.
Anuj Gupta, Head of Commodity & Currency at HDFC Securities, attributed this trend to promising US economic data providing support to the US dollar against major global currencies. Additionally, weakness in major global currencies has also helped keep US dollar prices stable or slightly positive.
Amit Goel, Co-Founder & Chief Global Strategist at Pace 360, noted that while traditional market dynamics suggest a negative correlation between gold and the US dollar, recent times have seen this relationship weaken. Both assets are currently in high demand due to factors such as the strength of the US economy compared to other developed economies and the hawkish stance of the US Federal Reserve. Gold’s rise, on the other hand, is fueled by expectations of rate cuts from central banks worldwide and its previous undervaluation.
Looking ahead, Gupta highlighted the significance of US inflation data expected on Wednesday. If the data doesn’t disappoint, it may trigger sharp profit-booking in the US dollar, leading to a decline and a corresponding rise in gold and silver prices.
Gupta also noted that once the strength in the US dollar diminishes, there could be significant upside in gold prices across markets. He outlined resistance and support levels for both gold and silver on the MCX, indicating potential price movements based on market dynamics.
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