Gold Price Outlook: Mojo back as economic woes weigh on China, US and Eurozone

Gold‘s safe-haven appeal is likely to get a fillip when bullion markets reopen on Monday as weak economic data released last week have put major economies, including the US, China, and Eurozone, on a slippery wicket. While traders remain cautious ahead of the Federal Reserve’s FOMC (Federal Open Market Committee) meeting, which begins on Tuesday, the turn of events has upped the outlook for the yellow metal.

“The economic data released last week indicated that the eurozone economy may have slipped into recession in the first quarter of this year after slowing in the first quarter of 2023 and the last quarter of 2022. Moreover, due to the decrease in business activities in America and Europe, the attention of investors is increasingly shifting toward the precious metals,” Nirpendra Yadav, Senior Commodity Research Analyst at Swastika Investmart, said.

“Meanwhile, China’s biggest banks cut interest rates for savers last week in a bid to boost growth in the economy, which may improve slowing consumption,” Yadav added.

“Gold and silver prices have recovered from lower levels, and the short-term rally in the US dollar index seems to be completed. The trends in precious metals are likely to remain bullish this week. In MCX June futures, gold takes support near Rs 58,300 and resistance near Rs 61,000. Meanwhile, in July futures, silver takes support near Rs 71,000 and resistance near Rs 76,000,” Yadav said.

“Positive outcome from the debt ceiling is giving support to gold. Moreover, the dollar has weakened due to unstable US Job data and expectations of a pause in interest rate by FOMC may give support to gold and silver this week,” Anuj Gupta, Vice President (VP), Commodity and Currency Research at IIFL Securities, said.

“We are expecting Gold to test Rs 60,500 per 10 grams on MCX, while silver to test Rs 75,000. If the Rs 75,000 level is breached, the next higher level for Silver futures will be Rs 76,500,” Anuj Gupta, Vice President (VP), Commodity and Currency Research at IIFL Securities, told ET Markets.
As for Comex, it could test $1,980 – $1,990 very soon, and if it can sustain above $1,990, then the yellow metal may test $2000 levels again, Gupta said.MCX Gold futures ended at Rs 59,840 per 10 grams on Friday and were down by Rs 51 or 0.09% from the Thursday closing price, while July Silver futures closed at Rs 73,825 per kg, higher by Rs 155 or 0.21%. The fall was on profit booking in the yellow metal ahead of the Fed FOMC meeting.

Comex gold ended at $1,975.70 per troy ounce, lower by $2.90 or 0.15%, while silver was up by $0.047 per troy ounce or 0.190% at $24.395 on Friday.

Gold futures on the MCX have declined by 0.62% or Rs 377 per 10 grams in June, Gupta said. They were up by 8.73% or Rs 4,804 on the year-to-date basis as of Friday, June 9, on the closing price basis, he said. Meanwhile, Silver futures have gained nearly Rs 1,694 or 2.35% in value terms in June while gaining by 6.31% or Rs 4,383 on the YTD basis, Gupta added.

The price of physical gold in Delhi and Ahmedabad is around Rs 61,000 per 10 grams while that of silver is Rs 74,150 per kg, the IIFL analyst said.

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