NEW DELHI: Gold and silver futures continued to be under pressure on Friday following the Fed announcement of tapering. Gold is often considered a hedge against higher inflation, but a Fed rate hike would increase the opportunity cost of holding gold, which pays no interest.
Fed Chairman Jerome Powell said the tapering process could conclude around the middle of next year, as long as the recovery remains on track, after the central bank’s policy statement this week suggested it may lift interest rates earlier than expected.
Gold futures on MCX were down 0.06 per cent, or Rs 29, at Rs 46,027 per 10 gram. Silver futures declined 0.18 per cent, or Rs 111, to Rs 60,678 per kg.
“Gold prices declined after the US Fed unveiled a plan to wind up pandemic related stimulus by mid-2022, adding it will hike rates by end of 2022. The US 10-year bond yields pressured gold prices and rose to 1.40 per cent to the highest since July 2021,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
In the spot market, highest purity gold was sold at Rs 46,694 while silver was priced at Rs 60,788 on Thursday, according to the Indian Bullion and Jewellers Association.
Trading strategy
“We expect gold prices to trade sideways to down for the day with COMEX Spot gold support at $1,740 and resistance at $1,770 per ounce. MCX Gold October support lies at Rs 45,800 and resistance at Rs 46,400 per 10 gram,” said Patel.
Global markets
Spot gold rose 0.2 per cent to $1,746.84 per ounce by 0102 GMT, after hitting its lowest since Aug 11 at $1737.46 on Thursday. Prices were down 0.4 per cent for the week. US gold futures eased 0.1 per cent to $1,747.80.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped 0.8 per cent to 992.65 tonnes on Thursday from 1,000.79 tonnes on Wednesday.
Silver rose 0.5 per cent to $22.61 per ounce and was up 1 per cent for the week so far. Palladium rose 0.5 per cent to $1,992.67, but was on track for a third straight week of decline. Platinum slipped 0.8 per cent to $980.67. However, the metal was headed for a 4.3 per cent weekly gain, biggest in six weeks.