Gold prices on Akshaya Tritiya, May 10: Check key levels before investing

Spot gold was up nearly 1 per cent Thursday on rate cut bets as the weekly US job data disappointed. The metal once again found support near $2,300 as it turned from the day’s low at $2,306 to hit the day’s high at $2,338.  Corresponding MCX levels for the June contract were 70,877 and Rs 71,708. The LTP was 71,652 as the metal was up nearly 0.74 per cent on the day. 

Geopolitical watch

The situation remains tense as constant shelling has been reported in Rafah. Nearly eighty thousand have fled the city. The US President Joe Biden said the US would not supply weapons to Israel if it launched a major offensive in Rafah; however, he added that it would still give Israel weapons it needed to defend itself.

ETF holdings

Total known global gold ETF holdings stood at 80.629 Moz as compared to 80.749 Moz seen at the end of the last week.

Data and event round up

US weekly jobless surged to the highest level since August as weekly claims came in at 231K as against the forecast of 212K, and continuing claims were noted at 1785K versus the forecast of 1782K. The weekly jobless claims data is yet another data supporting the possibility of weakening job market, though it was a week in which New York schools were closed; thus, applications by school workers could have distorted the data. 

The Bank of England, as expected, kept its benchmark rate unchanged at 5.25 per cent; however, two of its members voted for rate cuts. Markets expect that the Bank will cut rates in June. 

Yields and Dollar:

The ten-year yields, which were up throughout the day, fell nearly 2 basis points to 4.47 per cent. The US Dollar Index dropped by 0.28 per cent to 105.26.

Fedspeak:

Mary C. Daly, President of the Federal Reserve (Fed) Bank of San Francisco, said that there was massive uncertainty about inflation over the next three months. She observed that labor market is too strong, and inflation is too high.

China’s gold buying

China's central bank extended its gold buying spree to the 18th straight month in April as it added

1.9 metric tons, which brought its total to 2,264.3 tons. However, April quantum was the lowest amount of gold purchases by China's central bank since November 2022. Slowing purchase is somewhat negative for the metal as China has been a key driver of gold rally in the last two months. 

Outlook:

Gold prices on Akshay Tritiya are expected to range-trade in the near term and may test the resistance zone of $2,350-$2,360 (MCX July contract Rs 71,800-Rs 72,200 in the coming days. Support is at $2,300.

Today’s US data on tap include University of Michigan consumer sentiment and inflation expectations. Inflation data will be closely watched by market participants.

Buying the dips is a favourable option as long as yields are range-bound.


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Disclaimer: Praveen Singh is an Associate VP of Fundamental Currencies and Commodities at Sharekhan by BNP Paribas. Views are his own.