Gold prices traded higher on Tuesday as global bullion markets strengthened and the US dollar weakened. Safe haven demand increased amid ongoing geopolitical tensions in the Middle East.
Gold futures on Multi-Commodity Exchange (MCX) opened with strong gains in early trading. April gold contract rose by 0.90% and opened at Rs. 1,61,743 per 10 grams.
Silver prices witnessed even sharper gains. The May silver futures contract opened at Rs. 2,71,000 per kilogram. At one point, MCX silver surged nearly 4.18% to reach Rs. 2,78,339 per kilogram.
The price of 24K gold increased by Rs. 70 in early trade with ten grams of precious metal trading at Rs. 1,62,380. The price of 22K gold also advanced by Rs. 65, with ten grams of yellow metal selling at Rs. 1,48,850.
Price of ten grams of 24K gold stood at Rs. 1,62,380 in Mumbai and Kolkata and Rs. 1,64,180 in Chennai. In Delhi, the price of 10 grams of 24K gold was Rs. 1,62,530.
In international markets spot gold was trading around $5,131 per ounce while US gold futures for April delivery increased to approximately $5,141 per ounce.
Silver also rose globally with spot silver reaching approximately $87.32 per ounce. Meanwhile other precious metals saw minor declines as platinum slipped to about $2,168 per ounce. Palladium eased slightly to near $1,689 per ounce.
A key factor behind the rally in gold and silver was the decline in the US dollar. US dollar index dropped nearly 0.39% to around 98.79 making dollar-denominated commodities cheaper for holders of other currencies and boosting demand.
The dollar traded near 157.73 yen while the euro strengthened to around $1.1632 and the British pound hovered close to $1.3412.
Escalating tensions related to US-Iran conflict and disruptions around Strait of Hormuz. A key global energy shipped route and pushed crude oil prices higher.
Rising energy prices have increased concerns about inflation and could delay potential interest rate cuts by the US Federal Reserve.
In such environments gold often benefits from its reputation as a hedge against inflation and economic uncertainty.
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Internationally gold prices may find support near $5,120 per ounce. The resistance could emerge around $5,260.
On MCX gold is expected to have support at Rs. 1,58,800. The resistance may appear close to Rs. 1,62,500 per 10 grams.