NEW DELHI: Gold prices climbed on Friday as the dollar weakened after the US Federal Reserve decided to withdraw its pandemic-era stimulus in response to fight broadening inflationary risks.
The yellow metal is poised for its best weekly performance since mid-November. The US Fed said it would pave the way for three quarter-percentage-point interest rate increases by the end of 2022.
Gold futures on MCX rallied 0.13 per cent, or Rs 64, at Rs 48,710 per 10 gram. Silver futures eased marginally 0.07 per cent, or Rs 42, at Rs 62,109 per kg.
The dollar index remained under pressure after hitting a one-week low in the previous session, making greenback-priced bullion cheaper for holders of other currencies.
Fed’s hawkish stance, higher inflation and Omicron worries have added a risk premium in gold prices. Reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of holding bullion. Fears over Omicron coronavirus variant weighed on investor sentiment towards riskier assets.
Ravi Singh, Vice President & Head of Research, ShareIndia, said Fed sounded optimistic in it’s recent meeting regarding the US economic growth but the data numbers are somehow not supporting this optimism.
“US economic data continues to be disappointing as preliminary estimates show slowing activity in manufacturing and service sectors. The report said that activity in the manufacturing sector is at a one-year low,” he added.
In the spot market, highest purity gold was sold at Rs 48,384 per 10 gram while silver was priced at Rs 61,071 per kg on Thursday, according to the Indian Bullion and Jewellers Association.
The spot price of gold and silver have rapidly spiked in just one session. The yellow metal jumped more than Rs 300 on Thursday, whereas its white peer added about Rs 850 per kg.
Trading strategy
“We expect gold prices to trade up with COMEX Spot gold support at $1,785 and resistance at $1,820 per ounce. MCX Gold February support lies at Rs 48,200 and resistance at Rs 48,900 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Global markets
Spot gold was up 0.2 per cent at $1,802.87 per ounce, as of 0323 GMT, while US gold futures rose 0.3 per cent to $1,802.60. The metal has risen 1.1 per cent so far in the week, heading for its first weekly gain in five.
Silver dipped 0.1 per cent to $22.44 per ounce, platinum was flat at $936.01, and palladium rose 1.2 per cent to $1,750.57.