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Informist, Friday, May 16, 2025

By Abhijit Doshi

MUMBAI – Gold prices reversed the gain recorded in the last session Thursday and were heading for a steep weekly loss Friday as the safe haven appeal of the yellow metal weakened again. After falling for a large part on Thursday, gold prices rose towards the last session on the back of weaker-than-expected US economic data.

The US Producer Price Index for final demand fell 0.5% in April, marking the first monthly decline since 2023. This came on top of a softer US Consumer Price Index on Tuesday, which rose at the lowest annual rate since February 2021, and further pointed to signs of easing inflationary pressures.

Also, the US Department of Commerce reported that retail sales rose 0.1% in April compared to the previous month's upwardly revised growth of 1.7%. This increases the likelihood that the US economy will experience several quarters of sluggish growth and reaffirms dovish Fed expectations, FXStreet said in a note.

The weak data prompted market bets for more interest rate cuts by the Federal Reserve this year. This dragged the US Treasury bond yields sharply lower and undermined the dollar, lending support to the non-yielding yellow metal.

The price of gold went on a bit of a rollercoaster ride Thursday, observed analysts at Commerzbank. After briefly dipping towards $3,120 per ounce, it recovered by more than $100 over the course of the day. Ultimately, however, developments in trade conflict outweighed short-term economic data and interest rate expectations.

"Traders were seen locking in steep profits in gold, as it fell sharply from recent record highs. The yellow metal was also pressured by resilience in the dollar this week, as well as rising US Treasury yields," according to a report by investing.com, about Friday's market.

While geopolitical risks in West Asia continue to support safe-haven demand for precious metals, experts pointed out that fund liquidation of long gold positions continues to weigh on prices.

At 1717 IST Friday, June GOLD futures on COMEX were trading at $3,178.5 per ounce, down 1.5% from the previous close. The same-month contract on the MCX was down 1.1% at INR 92,143 per 10 grams.

"Technical indicators suggest continued weakness as long as prices remain below INR 94,000 on MCX and $3,240 on COMEX. The easing of global risk concerns and a firm dollar may continue to pressure gold in the short term," said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

Silver prices too gave up their gains recorded on Thursday. They had risen on the back of a weaker US dollar and disappointing US economic data, alongside heightened geopolitical uncertainty. The absence of Russian President Vladimir Putin from the peace talks had renewed the safe haven demand.

SILVER prices declined on COMEX by 1.6% to $32.16 per ounce, while they were down on MCX by 1.2% to INR 94,770 per kg.

The market will now watch for US housing data and the preliminary University of Michigan Consumer Sentiment and Inflation Expectations reports for May for cues on the further course of the market.

Outlook for the rest of the session:

--MCX gold seen at INR 90,460–INR 95,594 per 10 gm

--COMEX gold seen at $3,089.0–$3,325.9 an ounce

--MCX silver seen at INR 92,952-INR 98,138 per kg

--COMEX silver seen at $31.15-$33.36 an ounce

End

US$1 = INR 85.51

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Saji George Titus

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