NEW DELHI: Gold prices were flat on Friday, marginally higher, but the yellow metal is set for its sharpest weekly decline since November 2021. Markets digested the US Federal Reserve’s policy tightening plans for 2022 that propelled the dollar index to a multi-month peak.
Gold futures on MCX gained 0.10 per cent or Rs 46 at Rs 47,956 per 10 grams. Silver futures gained by 0.15 per cent or Rs 92 at Rs 62,036 per kg.
US economic growth accelerated in the fourth quarter to post its best performance in nearly four decades in 2021, the Commerce Department reported.
Gold is generally seen as an inflationary hedge, but it is highly sensitive to rising US interest rates, which increases the opportunity cost of holding non-interest bearing bullion.
Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities said that gold edged up as the US dollar index paused after a rally to July 2020 highs. Also supporting price is increased geopolitical tensions, rising inflationary pressure and choppiness in equities.
“However, expectations of faster and aggressive rate hikes by the Fed and strong US growth data weighed on the sentiments. Gold has corrected after failing, but we may not see a sustained decline amid weaker risk sentiment,” he added.
In the spot market, highest purity gold was sold at Rs 48,528 per 10 grams while silver was priced at Rs 62,687 per kg on Thursday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have remained almost flat in the last one week, whereas silver has dropped more than Rs 2,250 per kg in the last three sessions.
Trading strategy
Higher yields and interest rate hikes dent the appeal of bullion by raising the opportunity cost of holding non-interest paying gold, said Ravi Singh, Vice President and Head of Research, ShareIndia.
Gold may continue its bearish trend till Rs 47,700 to turn up the sentiments. He advised to buy gold near Rs 48,200 for the target of Rs 48,500 and sell below Rs 47,700 for the target of Rs 47,640.
Global markets
Spot gold was unchanged at $1,796.41 per ounce by 0109 GMT. US gold futures were up 0.2 per cent at $1,796. The metal fell about 2 per cent for the week, its worst fall since November 26.
Spot silver shed 0.2 per cent to $22.69 an ounce. Platinum was up 0.1per cent to $1,023.49 and palladium remained unchanged at $2,375.18.