As expectations of interest rate reductions from central banks remain very positive for commodity traders, the price of gold has increased sharply during trading on Monday of this week. Gold prices have risen because of forecasts by central banks regarding monetary policy.
There are two important monetary policy meetings that will take place over the next week: the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) meeting and the United States (U.S.) Federal Reserve (Fed) monetary policy meeting.
While it is widely anticipated that the RBI will hold its current level of monetary policy, India’s economy has sustained strong growth for the quarter ended in August at 8.2 percent (Q2), and inflation is currently low at 0.25 percent (as of October). Both of these factors have aided in improving the overall investor sentiment for gold and silver.
On MCX, the February Gold contract was trading 0.71% higher at Rs. 1,30,425 per 10 grams, while the Silver March contract jumped 1.9% to Rs. 1,78,289.
In Mumbai, gold prices increased. The price of 24-carat gold cost Rs. 12,348 per gram from Rs. 12,982 a day earlier, while 10 grams traded at Rs. 1,30,480 compared to yesterday’s Rs. 1,29,820.
Meanwhile, 22-carat gold also saw an increase to Rs. 11,960 per gram from Rs. 11,900. The 10-gram value rose to Rs. 1,19,600 from Rs. 1,19,000.
In Chennai, gold prices also jumped. The price of 24-carat gold rose to Rs. 13,167 per gram compared to Rs. 13,069 a day earlier. On the other hand, 10 grams traded at Rs. 1,31,670 compared to Rs. 1,30,690 yesterday.
22-carat gold also increased to Rs. 12,070 per gram from Rs. 11,980, with the 10-gram price reaching to Rs. 1,20,700 from Rs. 1,19,800.
The RBI MPC is scheduled to meet on December 3-5, with markets watching closely for clues on the central bank’s rate outlook.
Additionally, globally, many investors are closely watching the policies of the US Federal Open Market Committee (FOMC) during their meeting on December 9 and 10 of this year. According to the Chicago Mercantile Exchange (CME) FedWatch Tool, investors are currently pricing the likelihood of the FOMC cutting interest rates at 87 percent.
To date, domestic gold prices have increased approximately 66 percent in 2023, which has established a record increase in gold prices for several decades.
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In terms of support and resistance levels, gold seems to have strong support at $4,234 to $4,200 per ounce in global trading markets, and gold resistance is being established at approximately $4,300 to $4,340 per ounce.
Silver appears to also be exhibiting strong, supportive levels between $55.50 and $54.70 respectively and there is resistance forming around $57.40 to $58.00 respectively.
MCX gold is expected to find support at Rs. 1,28,200-Rs. 1,27,700, whereas resistance levels lie near Rs. 1,30,300-Rs. 1,31,200. Silver futures show support around Rs. 1,72,500-Rs. 1,69,600, while resistance is positioned at Rs. 1,78,800-Rs. 1,81,000.
Analysts recommend buying gold in the Rs. 1,29,500-Rs. 1,28,800 range with a stop loss below Rs. 1,28,100 and targeting levels of Rs. 1,30,300-Rs. 1,31,200.