NEW DELHI: Gold prices were trading largely unchanged on Monday. Lower treasury yields and a slight pullback in the US dollar supported the sentiments for bullion. However, traders braced for a 75-basis-point interest rate hike by the US Federal Reserve.
The US Fed is scheduled to meet this week to discuss the monetary roadmap.
The dollar rose 0.2 per cent against its rivals, making greenback-priced bullion more expensive for buyers holding other currencies. The US Fed’s meeting is due next week where interest rates hike by 75 basis points is expected.
Gold futures on
were trading marginally up by 0.05 per cent or Rs 26 at Rs 50,671 per 10 grams. However, silver futures plunged by 0.30 per cent or Rs 166 at Rs 54,965 per kg.
Although gold is seen as a hedge against inflation, rising interest rates increase the opportunity cost of holding bullion, which yields nothing on its own.
Gold prices have dropped more than $350, or 16 per cent, since scaling above the $2,000-per-ounce level in early March due to the Fed’s rapid rate hikes and the dollar’s recent rally.
In the spot market, the highest purity gold was sold at Rs 50,816 per 10 grams while silver was priced at Rs 55,009 per kg on Friday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold jumped about Rs 850 per 10 grams in the last session, whereas silver rallied more than Rs 1,100 per kg.
The rising inflation has driven investors to inflation hedged assets. The dollar witnessed selling from highs and rising concerns over US economic growth have increased the gold demand, said Ravi Singh, Vice President and Head of Research, ShareIndia.
“However, aggressive rate hikes and fiscal tightening measures by major central banks will still act as major resistance to gold. The cooling off in the prices of industrial metals and crude oil has also boosted the prices of the precious metals,” he added.
Trading Strategy
Gold has support at $1,712-1,700, while resistance is at $1,738-1,747. Silver has support at $18.42-18.30, while resistance is at $18.95-19.15, said Rahul Kalantri, VP Commodities, Mehta Equities.
“In rupee terms, gold has support at Rs 50,540–49,310, while resistance is at Rs 50,860–50,990. Silver has support at Rs 54,650-54,210, while resistance is at Rs 55,580–56,110,” he added.
Global markets
Spot gold was unchanged at $1,725.17 per ounce, as of 0232 GMT, after declining 0.2 per cent in early deals. It had hit a more than one-week high on Friday. US gold futures eased 0.2 per cent to $1,723.40 per ounce.
Spot silver was steady at $18.58 per ounce, platinum eased 0.2 per cent to $871.43, and palladium slipped 1.5 per cent to $2,001.62.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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