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Key Takeaways
The US non-farm payroll number for May added 172,000 jobs compared to expectations of just 85,000, while the unemployment rate remained flat at 4.3%. The data harmed precious metals due to rate anxiety overshadowing their status as safe havens, as investors started worrying about energy-led inflation.
The impact on Indian buyers is real. Gold and silver are priced in dollars globally. When the dollar strengthens and rate hike fears rise, metal prices fall worldwide, including on MCX. Short-term buyers may get a window here. But long-term investors face uncertainty until the Fed’s next move becomes clear.
This fall has a silver lining for Indian households. Gold jewellery purchases are now cheaper by roughly ₹5,300 compared to just eight days ago. Weddings and festive buying could see a short uptick. Investors holding silver in Sovereign Gold Bonds or ETFs, however, face mark-to-market losses in the near term.
Silver fell below $70 per ounce on Friday, its lowest level since late March, and is more sensitive than gold to rate-driven sell-offs. This is because a large portion of its demand comes from industrial use, which slows when economic growth expectations fall.
Kelvin Wong, Senior Market Analyst at OANDA, said, “It is all based on the hawkishness that the market has started to place on the Fed futures.” He adds that higher Treasury yields are further pressuring gold. The 10-year US Treasury yield rose to a two-week high, which makes non-yielding metals less attractive.
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Brett Elliott, Director of Marketing at APMEX, warned, “The near-term outlook for gold is high volatility.” He also noted gold has gained a strong negative correlation with oil as the Iran conflict drags on, and higher oil prices could push rates higher, which hurts gold further.
Analysts ask to watch the US inflation data, any Fed communication, and Middle East developments closely. These will decide whether the current fall is a buying dip or the start of a deeper correction.
Gold and silver are under real pressure right now. A hot US jobs report, Middle East tensions, and rising Treasury yields have combined to drag both metals lower. Indian buyers get lower prices in the short term. But investors should stay cautious. The near-term bias remains negative until clearer signals emerge from the US Federal Reserve.
Why do gold and silver prices keep falling whenever US jobs data comes in strong?
When more jobs are added in the US economy than anticipated, traders assume the Federal Reserve will lift rates. The higher the rates, the more attractive bonds are relative to gold/silver. So money goes out of metals. That's why both fell after the May jobs report.
What are the current resistance levels for gold and silver on MCX?
The metal is expected to remain under pressure this week, according to Axis Securities analysts. The crucial resistance level for silver is seen at $73 a troy ounce on Comex. Until silver stays below that level, the outlook remains weak. Watch Fed commentary and US inflation data for the next move.
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