NEW DELHI: Gold prices held steady at their five-month peaks on Tuesday after a strong up move in the previous session. Concerns over broadening inflationary risks kept bullion’s safe-haven appeal intact in the face of a stronger US dollar and elevated bond yields.
Gold futures on MCX were up by 0.12 per cent or Rs 23 at Rs 49,359 per 10 grams. However, silver futures were up 0.51 per cent or Rs 340 at Rs 66,903 per kg.
Rate hikes tend to weigh on gold as higher interest rates raise the non-yielding metal’s opportunity cost. A stronger dollar makes gold more expensive for buyers holding other currencies, while higher yields increase the opportunity cost.
Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities said: Gold continues to trade near June highs, however, the momentum has stalled amid mixed factors. Increasing demand for gold is supporting prices amid rising inflation and choppiness in equities.
“Higher US dollar and bond yields amid expectations that Fed may act soon to keep a check on inflation weighed on the sentiments. Gold may remain range-bound amid mixed factors. But investors can buy dips as central banks ponder monetary tightening,” he added.
In the spot market, the highest purity gold was sold at Rs 49,351 per 10 grams while silver was priced at Rs 66,967 per kg on Monday, according to the Indian Bullion and Jewellers Association.
The spot price of gold has jumped more than Rs 1,650 per 10 grams in the 10 days, whereas Silver has shown gained about Rs 3,400 per kg during the period under review.
Ravi Singh, Vice President & Head of Research, Share India said that gold futures traded marginally higher taking cues from the rising demand of gold globally.
“The rising US Treasury yields amid increasing inflation is continuously putting pressure on gold prices and capping the upward move. “The outlook of gold is positive and investors are advised to go long on every correction in gold futures,” he added.
Trading strategy
“We expect gold prices to trade sideways to up for the day with COMEX Spot gold support at $1,850 and resistance at $1,890 per ounce. MCX Gold December support lies at Rs 49,000 and resistance at Rs 49,700 per 10 grams,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Global markets
Spot gold was flat at $1,862.81 per ounce, as of 0140 GMT. U.S. gold futures were also flat at $1,866.80.
Spot silver was steady at $25.04 per ounce. Platinum fell 0.1 per cent to $1,085.54 and palladium dropped 0.6 per cent to $2,142.19.