NEW DELHI: Gold prices surged up on Wednesday, on the back of falling US bond yields. Investors are holding back from making large bets ahead of US inflation data and the European Central Bank policy meeting this week. The precious metal traded firm in domestic markets.
Labour Department data showed US job openings surged by nearly one million to a new record high in April. US small-business confidence edged lower last month, the first decline in four months, as a nationwide labour shortage and inflation worries weighed on business owners’ economic outlook.
Market participants are awaiting the US consumer price index report due on Thursday for better clarity. The ECB is expected to hold its policy meeting on the same day. Both events will be closely watched by investors, who trade the yellow metal as a hedge against inflation.
The benchmark 10-year Treasury yields fell to their lowest in more than a month, reducing the opportunity cost of holding non-interest bearing gold. The Dollar Index was teetering a little above 90.
Demand for physical gold is likely to rise in the coming days in the second largest bullion market of the world. Lifting restrictions by states augurs well for the jewellery industry.
Gold futures on Multi Commodity Exchange (MCX) were up by 0.07 per cent or Rs 35 at Rs 49,162 per 10 grams. Silver futures gained 0.25 per cent or Rs 175 to Rs 71,406 per kg.
“COMEX gold trades mixed near $1897/oz after a 0.2 per cent decline yesterday. Gold is choppy as support from lower bond yields, choppy equities is countered by upbeat US jobs openings report, lack of ETF buying and slack consumer demand in India,” Ravindra Rao, CMT, EPAT, VP-Head Commodity Research, Kotak Securities.
In the spot market, highest purity gold was sold at Rs 49,031 while silver was priced at Rs 71,331 on Tuesday, according to the Indian Bullion and Jewellers Association.
“Gold may remain choppy reflecting volatility in the equity market and US dollar, however the general bias may be on the upside unless the US dollar edged up sharply.”
Trading strategy
“We expect gold prices to trade sideways to down for the day with COMEX gold support at $1880 and resistance at $1910 per ounce. MCX Gold Aug support lies at Rs. 49100 and resistance at Rs. 49700 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Global markets
Spot gold was up 0.1 per cent at $1,893.78 per ounce, as of 0045 GMT. US gold futures edged 0.1 per cent higher to $1,896.60 per ounce.
Silver was steady at $27.63 per ounce, palladium gained 0.2 per cent to $2,812.30, while platinum edged 0.1 per cent lower to $1,160.81.