New Delhi [India]: Gold prices witnessed high volatility on Friday, swinging between gains and losses on the Multi Commodity Exchange (MCX) amid profit booking at record highs and easing geopolitical tensions following the ceasefire deal between Israel and Hamas.
In early trade, gold prices edged higher but soon erased gains as traders booked profits at elevated levels. However, renewed buying in the afternoon session lifted prices again, indicating that investors were looking to accumulate on dips amid overall bullish sentiment.
At around 12:20 pm, MCX Gold December futures were trading 0.22 per cent higher at ₹1,20,764 per 10 grams, while MCX Silver December futures were up 0.57 per cent at ₹1,47,156 per kilogram.
Gold gains support from weaker dollar
The US dollar index declined by more than 0.20 per cent during the session, lending support to gold prices. Since gold is priced in US dollars, a weaker dollar makes the metal more affordable for buyers holding other currencies, thereby increasing demand.
MCX gold had earlier touched a record high of ₹1,23,677 per 10 grams in the previous session, while silver hit a fresh peak of ₹1,53,388 per kilogram. However, after such sharp gains, some profit booking was expected, especially with easing tensions in the Middle East.
“Gold prices continued to slip as easing tensions in the Middle East prompted investors to book profits in safe-haven assets like gold. Despite the recent dip, gold is still on track for its eighth consecutive weekly gain,” said Darshan Desai, CEO of Aspect Bullion & Refinery.
Geopolitical developments influence sentiment
Market sentiment turned slightly cautious after reports of Israel formally approving the first phase of a US-brokered ceasefire and hostage release plan. The development raised hopes for reduced geopolitical risk in the region, leading to short-term profit-taking in precious metals.
However, analysts noted that gold continues to receive strong fundamental support from broader macroeconomic concerns, including expectations of a rate cut by the US Federal Reserve and persistent economic uncertainties in major economies such as Japan and France.
According to Reuters, the CME FedWatch Tool shows that traders are currently pricing in a 25-basis-point rate cut in October with a 95 per cent probability and another in December with an 82 per cent probability.
Experts highlight key levels to watch
Commodity analysts have identified crucial support and resistance levels for gold and silver both in international and domestic markets.
Manoj Kumar Jain of Prithvifinmart Commodity Research stated that gold has support at $3,944 and $3,910, while resistance lies at $4,040 and $4,080 per troy ounce. Silver’s support is seen at $46.40 and $45.50, with resistance at $48 and $48.80 per troy ounce.
On the MCX, Jain said gold has support at ₹1,19,100 and ₹1,17,700, while resistance is expected at ₹1,21,650 and ₹1,23,100. For silver, support levels are pegged at ₹1,44,400 and ₹1,41,000, while resistance levels stand at ₹1,48,800 and ₹1,51,500.
“We suggest traders stay away from gold and silver in today’s session due to high volatility. However, long-term investors can continue to hold and accumulate through SIP mode on declines, as there is no change in the long-term fundamentals of gold and silver,” Jain added.
Dollar weakness and Fed outlook keep gold buoyant
Rahul Kalantri, VP of Commodities at Mehta Equities, noted that the dollar’s weakness and expectations of a Federal Reserve rate cut are likely to keep gold prices supported in the medium term.
Kalantri said, “Gold has support at $3,940 and $3,910, while resistance is located at $4,020 and $4,045. Silver has support at $48.70 and $48.20, while resistance is at $50.20 and $50.80.”
In Indian rupee terms, gold has support at ₹1,19,870 and ₹1,19,280, with resistance at ₹1,21,850 and ₹1,22,400. Silver has support at ₹1,45,450 and ₹1,44,650, while resistance lies at ₹1,47,550 and ₹1,48,450.
Outlook: Cautious optimism amid high volatility
Analysts believe that while short-term fluctuations are likely due to geopolitical and macroeconomic triggers, gold’s long-term outlook remains positive given global uncertainty, expectations of interest rate cuts, and sustained investment demand.
“Gold’s ability to attract buyers on dips signals underlying strength. Investors continue to view it as a hedge against inflation and economic instability,” said Desai.
With geopolitical developments in flux and global monetary policy poised for easing, gold prices may continue to exhibit volatility in the near term but remain supported by strong fundamentals.