Prospects that the US Federal Reserve will continue its aggressive policy tightening has undermined the appeal of zero-yield bullion.
Gold futures on
were trading lower as they fell by 0.41% or Rs 206 to Rs 50,208 per 10 grams. However, silver futures fell 1.67% or 885 rupees to 52,266 rupees per kg.
Even though gold is considered an inflation hedge, higher interest rates increase the opportunity cost of holding bullion and boost the dollar.
Rahul Kalantri, vice president of commodities, Mehta Equities, said bullion prices fell sharply as gold hit five-week lows and silver prices slipped below two-year lows, weighed down by strengthening dollar index and bond yields.
Fundamentals remain negative for the metal, while bearish technical studies add to the weakness in the structure, he added. “However, due to oversold conditions, some consolidation could be seen in the yellow metal going forward.”
Gold premiums in top consumer China hit their highest level since October last week as falling global prices encouraged buying, while demand cooled in India as buyers waited for a larger price drop.
In the spot market, the highest purity gold was sold at Rs 51,188 per 10 grams while silver was priced at Rs 54,350 per kg on Tuesday, according to the Indian Bullion and Jewelers Association.
Spot gold prices remained below 52,000 rupees per 10 grams for almost two weeks, while silver fell by around 3,450 rupees per kg during the same period under review.
Following the Fed’s reiteration of the rate hike, European Central Bank policymakers on Tuesday called for decisive and swift rate hikes to tackle soaring inflation ahead of next week’s policy meeting, a report said. said Ravi Singh, vice president and head of research at ShareIndia.
“However, gold is considered an inflation hedge, but rate hikes increase the cost of holding gold,” he added. “There is also a bigger than expected rebound in US consumer confidence in August, which again is negative for gold’s trend.”
Commercial strategy
“We expect gold prices to trade sideways for the day with COMEX Gold Spot support at $1,680 and resistance at $1,720 per ounce. October MCX Gold support stands at Rs 50,100 and resistance at Rs 50,800 per 10 grams,” said Tapan Patel, Senior Analyst (Commodities),
Securities.
Global Markets
Spot gold fell 0.2% to $1,706.99 an ounce as of 0100 GMT after hitting its lowest level since July 21 at $1,704.94 earlier. US gold futures fell 0.5% to $1,717.50.
Spot silver fell 0.8% to $17.83 an ounce after falling to a more than two-year low. Platinum fell 0.9% to $838.24 and palladium fell 0.6% to $2,072.09.
(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
