Gold prices saw a nearly 1% decline in the domestic futures market on Wednesday, February 12, following hawkish remarks from U.S. Federal Reserve Chair Jerome Powell. The drop dampened investor sentiment and caused MCX Gold for the April 4 contract to fall by as much as 0.84% during the morning session.
The contract opened 0.70% lower at ₹84,926 per 10 grams, compared to the previous close of ₹85,523. Within minutes, the price dropped to ₹84,807. As of 9:40 AM, the April 4 contract was trading at ₹84,452 per 10 grams, reflecting a 0.78% decline. On February 11, the same contract had reached an all-time high of ₹86,360 per 10 grams.
International Gold Prices Reflect Profit Taking
The global gold market also experienced profit-taking after hitting record highs in the previous session. Powell’s hawkish comments signaled a slower pace of rate cuts this year, shifting investor focus to upcoming U.S. inflation reports.
The U.S. Consumer Price Index (CPI) report is due later today, while the Producer Price Index (PPI) report will be released on Thursday. Powell, in his testimony before Congress on Tuesday, reaffirmed the Federal Reserve’s cautious approach to interest rates, highlighting persistent inflation and a strong job market.
His comments suggest that fewer rate cuts are expected this year, amid ongoing uncertainties surrounding U.S. President Donald Trump’s trade policies and their broader economic impact. Analysts fear these policies could spark a trade war, potentially slowing global economic growth and driving inflation higher in the U.S., complicating the Fed’s efforts to control it.
Rate Cuts in Doubt as Economic Uncertainty Looms
Although the Fed had initially projected two rate cuts for this year, economists at Morgan Stanley now forecast only one rate reduction in 2025, with the market anticipating a potential cut in July. Higher interest rates generally negatively affect gold prices, as the metal offers no yield.
Gold has traditionally gained in times of economic uncertainty, but elevated interest rates work against the yellow metal. Recently, geopolitical instability, aggressive central bank buying, and a focus on safe-haven assets by retail investors have driven gold prices higher.
In India, a weakening rupee, subdued stock market sentiment, and strong physical demand have contributed to gold’s price movements.
MCX Gold Trade Strategy
Rahul Kalantri, VP of commodities at Mehta Equities, outlined support and resistance levels for gold today. Gold has support at $2,872-2,855 and resistance at $2,924-2,940, with INR levels at ₹85,170-84,760 for support and ₹85,880-86,240 for resistance. For silver, Kalantri sees support at $31.55-31.32 and resistance at $32.00-32.19.
Manoj Kumar Jain of Prithvifinmart Commodity Research expects gold and silver prices to remain volatile this week. He suggests selling gold near ₹85,800, with a stop loss at ₹86,220 and a target of ₹85,000.
Jain’s support and resistance levels for gold are $2,914-2,896 for support and $2,950-2,970 for resistance. Silver has support at $32.00-31.66 and resistance at $32.64-33.00 per troy ounce. In INR, MCX Gold has support at ₹85,100-84,660 and resistance at ₹85,820-86,350, while silver has support at ₹93,750-92,800 and resistance at ₹95,200-96,000.
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