Fed Chairman Jerome Powell promised he and fellow policymakers would “continue” their battle to fight inflation as the US central bank raised interest rates by 75 basis points.
Gold futures on
were trading slightly lower by 0.11% or Rs 55 to Rs 49,388 for 10 grams. However, silver futures fell by 0.31% or Rs 176 to Rs 57,122 per kg.
Gold is seen as a hedge against inflation, rising interest rates increase the opportunity cost of holding the non-earning asset and strengthen the dollar, in which bullion is valued.
Gold prices retreated after Russia ordered a partial mobilization to defend its sovereignty, said Ravi Singh, vice president and head of research, ShareIndia
“The US dollar index and bond yields have already risen on expectations of aggressive Fed action,” he added. “If the rate hike is delayed or minor, we could see a US dollar correction that will support gold prices.”
Physical demand for gold picked up in India as domestic prices fell ahead of major festivals, while premiums in China rose further as its currency weakened.
In the spot market, the highest purity gold was sold at Rs 49,606 per 10 grams while silver was priced at Rs 56,667 per kg on Wednesday, according to the Indian Bullion and Jewelers Association.
Spot gold prices have plunged by more than 1,500 rupees per 10 grams over the past three weeks, while silver has jumped around 1,500 rupees per kg over the same period under review.
Gold and silver prices capitalized on their recent gains, even as copper extended losses in international markets following a rise in interest rates and a hawkish message from the Fed, said Rahul Kalantri, vice president of commodities, Mehta Equities.
“Fed Chairman Jerome Powell said the bank needed to take much more aggressive action to combat runaway inflation and was prepared to put some pressure on the economy and labor market” , he added.
Commercial strategy
“We expect gold prices to trade sideways for the day with COMEX Gold Spot support at $1,640 and resistance at $1,676 per ounce. October MCX Gold support stands at Rs 48,800 and resistance at Rs 49,500 per 10 grams,” said Tapan Patel, Senior Analyst (Commodities),
Securities.
Global Markets
Spot gold fell 1% to $1,656.97 an ounce, by 0114 GMT. US gold futures fell 0.5% to $1,667.30.
Spot silver fell 1.7% to $19.26 an ounce, platinum fell 1.1% to $897.92 and palladium fell 0.8% to $2,138.51 .
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