Gold rate crashes over 1% on MCX as Fed rate cut hopes weaken amid US-Iran war

Gold price today: Gold rate declined by more than 1% in early deals on the MCX on Monday (March 16) morning amid dimming hopes of a near-term rate cut by the US Federal Reserve, as the ongoing US-Iran war has raised inflationary risks and increased concerns that economic growth is losing momentum.

MCX gold April futures dropped by ₹1,800, or 1.14%, to ₹1,56,655 per 10 grams in early deals on Monday, while MCX silver May contracts crashed by more than ₹4,300, or 1.7%, to ₹2,55,101 per kg.

The US-Iran war, which started on February 28, has entered the third week, driving crude oil prices sharply higher as trade through the Strait of Hormuz has come to a halt.

Brent Crude prices remain above the $100-per-barrel mark, raising the risk of global inflationary pressures.

The dollar index eased by nearly 0.20% but stayed above the 100 mark, weighing on gold prices.

Meanwhile, the US Federal Reserve is expected to keep rates steady on March 18, considering the evolving geopolitical and geoeconomics situations.

"The Fed is widely expected to hold its policy rate steady this week. Higher energy prices and mounting inflationary pressures have lowered expectations that the US Federal Reserve and other major central banks will cut interest rates, posing a headwind for non-yielding precious metals," Jigar Trivedi, Senior Research Analyst at IndusInd Securities, observed.

US economic growth was weaker-than-expected in the fourth quarter. US Gross Domestic Product (GDP) increased at a 0.7% annualized rate in Q4, revised ​down from the initially reported 1.4% pace.

On the other hand, the US Fed's preferred inflation gauge, the US Personal Consumption Expenditures (PCE) price index, increased 0.3% in January after rising 0.4% in December. Year-on-year, PCE inflation rose by 2.8% after rising 2.9% in December.

Gold and silver: Key technical levels to watch

According to Manoj Kumar Jain of Prithvifinmart Commodity Research, gold has support at $5,015 and $4,974, while resistance is at $5,100 and $5,145 per troy ounce, and silver has support at $78.00 and $74.40, while resistance is at $84.00 and $86.40 per troy ounce in today’s session.

On the MCX, Jain said gold has support at ₹1,57,200 and ₹1,55,500 and resistance at ₹1,59,800 and ₹1,61,100, while silver has support at ₹2,55,500 and ₹2,48,800 and resistance at ₹2,63,000 and ₹2,67,700.

"We suggest traders must wait for some stability in the markets for taking fresh positions, while long-term investors can accumulate in SIP mode during market dips," said Jain.

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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.