Gold price dips ₹3300 from record high. Should you buy as US non-farm payroll data fails to beat estimates?

Gold rate today: Following the ease in the Iran-Israel conflict and a dent to the US Fed rate cut buzz in the near term, gold price declined for the second straight week. Gold future contract for June 2024 expiry on the MCX finished at ₹70,677 per 10 gm, logging a weekly loss of ₹809 per 10 gm against the previous Friday's close of ₹71,486 per 10 gm. However, if we compare MCX's gold rate today with its record high of ₹73,958, which climbed on 12th April 2024, the gold price today is around ₹3300 per 10 gm lower than its record high. Spot gold price ended on Friday at $2,301 per ounce, logging a weekly loss of around $48 per ounce against its previous Friday close of $2,349. After ending at the $2,301 level, the spot gold price corrected around $148 lower from its lifetime high of $2,448.80 per ounce. COMEX gold price finished at $2,310 per troy ounce level.

What is dragging gold rates today?

On reasons that have pulled down gold prices from record higher levels, Anuj Gupta, Head of Commodity & Currency at HDFC Securities, said, "Gold prices declined on rising fear that the US Fed may take longer to cut interest rates due to persisting inflation risk. Data on Thursday showed labour costs surged the most in a year, which put extra pressure on gold prices. Additionally, the safe haven premium continues to erode in gold after a possible ceasefire between Israel and Hamas, weighing on gold price."

Praveen Singh, an Associate VP specializing in Fundamental Currencies & Commodities at Sharekhan by BNP Paribas, provided a detailed analysis. He said, "Gold prices have slid lower as traders have taken into account the latest FOMC policy decision and focused on the 'higher for longer' rate narrative, which suggests only one rate cut this year. The weekly US job data, which were better than forecast, and the unit labour costs (1Q preliminary) at 4.70% Vs the forecast of 4%, continue to affirm inflationary pressure in the US economy. The factory orders ex transport (March) at 0.50% were better than the forecast of 0.2%. The durable goods orders data (March final) were in line with the forecast. Today's US non-farm payroll report and ISM services data are crucial for gold. The US yields fell as a block buy of 7000 contracts in five-year bonds alleviated the downside pressure. The US Dollar Index tumbled as yields dipped amid a risk-on scenario."

US non-farm payroll data in focus

Expecting further pressure on gold prices, Praveen Singh of Sharekhan by BNP Paribas said, "Overall, gold is still as weak as geopolitical concerns are contained and multiple rate cut possibility has diminished. Gold prices will fall further, but the downside will be limited as the US non-farm payroll data released yesterday was positive but below the market estimates."

Speaking on the latest US job data, Anuj Gupta of HDFC Securities said, "The US has reported positive non-farm payroll data for April 2024, which is below the market estimates. The market had estimated a 2.43 lakh increase in the non-farm payrolls while the data released on Friday reports a rise of 1.75 lakh in non-farm payrolls."

Gold rate today: Important levels to watch

"Comex spot gold price has support at $2266 and $2237, whereas it faces resistance at $2322 and $2345, respectively. The MCX Gold June future has support at ₹70080 and ₹69580, respectively, while MCX gold rate today is finding resistance at ₹70950 and ₹71700," said Anuj Gupta.

On the suggestion to the positional investors, Anuj Gupta said, "Gold investors should wait for long entry; gold prices are likely to correct further from the current level, and $2250 to $2265 is a good level for long entry where the risk-reward is favourable."

Disclaimer: The views and recommendations provided above are those of individual analysts or broking companies, and not of Mint. We strongly advise investors to consult with certified experts before making any investment decisions, ensuring their interests are safeguarded.