MCX gold rallies for fifth straight week; gains ₹19,000 per 10 grams in August

MCX gold prices in India extended their rally for a fifth consecutive week, pushing August gains into double digits as a persistent decline in the U.S. dollar made bullion cheaper for holders of other currencies, supporting demand for the metal.

Even as crude oil prices climbed to a one-month high earlier this week, the reduced expectations of a US Federal Reserve rate hike in its upcoming meeting have further aided the sentiment.

MCX gold wrapped up the week with gains of nearly ₹8,000 per 10 grams, settling at ₹1,62,438 and marking its highest level in more than three months. The latest rally pushed its August gains to 13.3% or ₹19,000, while its year-to-date return rose to 20%.

Renewed demand has also helped the yellow metal recover much of its earlier losses, narrowing the gap from its record high of ₹1,80,779 touched in January.

At current levels, gold is trading about 10% below its peak, compared with a gap of around 21% at the start of the month. Along with gold, silver also closed the week strongly by gaining ₹10,673, settling at ₹2,48,124 per kilo.

Dollar at three-month low

The U.S. dollar fell to a three-month low on Wednesday as concerns mounted that the U.S. Treasury's plan to expand buybacks of longer-dated government debt could put further pressure on the currency.

Treasury Secretary Scott Bessent said on Thursday that the government could further increase its repurchases of Treasuries, a day after the department surprised markets by pledging to at least double the size of its buybacks of longer-dated debt in an effort to rein in bond yields.

Long-dated Treasury yields jumped this week, with the 30-year yield reaching its highest level since 2007. Traders cited concerns over the deteriorating fiscal outlook, heavy debt issuance, geopolitical risks stemming from the war with Iran, and uncertainty over the Federal Reserve's policy outlook.

The U.S. national debt has reportedly surpassed a record $40 trillion, prompting investors to demand higher returns amid growing concerns over widening budget deficits.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, dropped to 98.44, its lowest level since May 2029, before ending the week marginally higher at 98.57.

The next key test for whether Treasury yields continue to climb may come next Friday, when Federal Reserve Chairman Kevin Warsh delivers a speech at the central bank's Jackson Hole symposium. Warsh unsettled markets after the Fed's July meeting by offering few clues about how policymakers might respond to persistent price pressures. A divided Fed had left interest rates unchanged.

Jackson Hole speech holds the key as gold rally faces resistance

Ponmudi R, CEO of Enrich Money, said that the commodity outlook remains constructive for precious metals but highly volatile for energy. Gold and silver could continue to benefit from reduced expectations of immediate Federal Reserve tightening, although elevated Treasury yields and the inflationary impact of higher oil prices remain key risks.

He added that Fed Chair Kevin Warsh's Jackson Hole address will be the pivotal near-term catalyst. A dovish or neutral tone could extend support for bullion by reinforcing expectations of a policy pause or eventual easing, while a hawkish surprise could trigger a rebound in the U.S. dollar and put renewed pressure on gold and silver.

On the technical front, Ponmudi noted that the weekly RSI has risen to 65.03, while the daily RSI at 76.10 sits in overbought territory, suggesting the move has become extended in the near term. Immediate resistance is placed in the ₹1,62,500– ₹1,63,000 zone; a sustained close above ₹1,63,000 would confirm continuation toward ₹1,65,000.

On the downside, immediate support lies in the ₹1,58,500– ₹1,59,000 zone, with the next support at ₹1,55,500– ₹1,56,000. A break below ₹1,58,500 would signal that the sharp rally is due for a deeper correction.

Overall, he said the trend remains firmly bullish, given the string of higher highs and rising RSI, but the overbought daily reading warrants some caution against chasing the rally at current levels.

(With inputs from Reuters)

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