Gold, Silver Dip on Soft US Inflation; Analysts Bullish

Gold and silver prices experienced a notable decline on Thursday, August 13, reversing earlier gains after a subdued US inflation report. This movement prompted investors to engage in profit booking.

• Spot gold fell nearly 0.7% to $4,373.
• Silver dropped over 1% to approximately $64.5 per ounce.
• MCX gold October futures decreased by 0.54% to Rs 1,54,010 per 10 grams.
• MCX silver September futures fell by 0.98% to Rs 2,35,514 per kg.

Kotak Securities attributed this pullback to a classic “buy the rumour, sell the fact” market response. The July Consumer Price Index (CPI) eased to 3.4% year-over-year from 3.5%, significantly reducing the likelihood of a near-term US Federal Reserve rate hike.

Precious Metals Outlook

Despite the recent dip, Kotak Securities maintains a positive bias for precious metals. This outlook is bolstered by softer inflation, lower interest rate expectations, and persistent accumulation by Exchange Traded Funds (ETFs).

• Elevated market positioning could cap gains.
• Continued profit-taking is also a factor.
• Renewed geopolitical demand for the US dollar may limit upside.

Future movements will heavily depend on upcoming Producer Price Index (PPI) and labor-market data. Further disinflation would strengthen the bullish case, while higher inflation could lead to increased yields and a stronger dollar, thereby delaying a sustained rally.

Key Technical Levels: Gold

• Spot Gold support is at $4,349.2, with further key supports at $4,327 and $4,256.8.
• Resistance levels are identified at $4,419.9, $4,441.7, and $4,512.3.

• For MCX Gold October futures, support levels are at Rs 1,53,056, Rs 1,52,528, and Rs 1,50,817.
• Resistance is at Rs 1,54,768, Rs 1,55,296, and Rs 1,57,007.

Key Technical Levels: Silver

• Spot Silver estimated support levels are $63.73, $63.15, and $61.25.
• Resistance is seen at $65.63, $66.21, and $68.11.

• On MCX, Silver is likely to face support at Rs 2,32,791, Rs 2,31,430, and Rs 2,27,023.
• Resistance is at Rs 2,37,199, Rs 2,38,560, and Rs 2,42,967.

The market remains highly sensitive to economic indicators, with upcoming data pivotal for determining the trajectory of precious metals.