NEW DELHI: Gold prices dropped on Tuesday, nearing their weekly lows as the US Treasury yields spike ahead of an expected rate hike from Federal Reserve on Wednesday. Peace talks between Russia and Ukraine also dampened the bullion’s appeal. Russian and Ukrainian delegations held a fourth round of talks on Monday.
Gold futures on MCX were trading lower by 0.68 per cent or Rs 354 at Rs 51,950 per 10 gram. Silver futures were trading down by 0.44 per cent or Rs 303 at Rs 68,541 per kg.
Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion. US Treasury yields jumped to a two-and-a-half-year high on Monday.
Pritam Patnaik, Head – Commodities, Axis Securities, said gold bulls continue to remain cautious ahead of the key Federal Reserve meeting where policy makers are set to raise interest rates.
“Markets expect about seven quarter-point Fed rate hikes in 2022. The market will closely watch for the Fed’s commentary. If it is not too hawkish, we could see the bulls back in action,” he added.
In the spot market, highest purity gold was sold at Rs 51,961 per 10 gram while silver was priced at Rs 68,414 per kg on Monday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have dropped about 1,650 per 10 gram since March 7, whereas silver has eased about Rs 2,500 per kg in the last five trading sessions.
Gold prices are witnessing profit booking right now and trading at overbought zone, said Ravi Singh, Vice President and Head of Research, ShareIndia.
“The high volatility due to the Russia Ukraine war is governing the move and the underlying trend in gold is still bullish. Investors may buy on dips till the situation stabilises,” he adds.
Trading strategy
“We expect gold prices to trade sideways to down for the day with COMEX Spot gold support at $1,920 and resistance at $1,970 per ounce. MCX Gold April support lies at Rs 51,800 and resistance at Rs 52,600 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Global markets
Spot gold was down 0.4 per cent at $1,942.96 per ounce by 0121 GMT, after touching its lowest since March 4 at $1,940 earlier in the session. US gold futures fell 0.5 per cent to $1,951.20.
Spot silver shed 0.4 per cent to $24.92 per ounce, while platinum was down 0.1 per cent to $1,029.16. Palladium fell 1 per cent to $2,363.06 per ounce, after declining more than 15 per cent. in the previous session on easing supply fears.