NEW DELHI: Gold prices dipped lower on Monday to its new two-week lows as the aggressively hawkish Fed continued to weigh on the bullion’s sentiments, following its approach of tightening monetary policy. With expectations of a half-percentage point interest rate hike at the Fed’s May meeting now locked in, traders on Friday piled into bets that the US central bank will go even bigger in subsequent months.
Gold futures on MCX dropped 0.42 per cent or Rs 221 down at Rs 52,040 per 10 grams. However, silver futures were trading sharply lower by 1.27 per cent or Rs 856 at Rs 65,724 per kg.
Pritam Patnaik, Head – Commodities, Axis Securities, said with the global central banks moving towards a higher interest rate environment, led by the US Fed, it’s not surprising to see the pressure on gold prices.
“With the dollar index making a new high and the bonds yields rallying, it’s not surprising to see the lack of interest in a non-interest bearing asset like gold,” he added. “We could witness additional pressure on prices.”
In the spot market, highest purity gold was sold at Rs 52,474 per 10 grams while silver was priced at Rs 66,685 per kg on Friday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have dropped more than Rs 1,550 per 10 gram in the last six sessions, whereas silver has tumbled about Rs 3,700 per kg in the last five trading days.
Gold is highly sensitive to rising US short-term interest rates and higher yields, which increases the opportunity cost of holding non-yielding bullion. It is, however, seen as a safe store of value during economic and political crises.
Gold traders would be closely watching French Presidential election outcome and US GDP data this week, said Ravi Singh, Vice President and Head of Research, ShareIndia.
“The rising Covid cases in China is also a matter of high concern. Gold prices may see a surge in view of rising domestic demand and fall in dollar index,” he added.
Trading strategy
Rahul Kalantri, VP Commodities, Mehta Equities, expects more weakness in bullion price in today’s session. Gold has support at $1,917-1,905, while resistance at $1,940-1,948. Silver has support at $23.80-23.62, while resistance is at $24.34-24.55.
“In rupee terms, gold has support at Rs 51,920–51,770, while resistance is at Rs 52,420–52,550. Silver has support at Rs 66,050- 65,710 while resistance is at Rs 66,890–67,270,” he added.
Global markets
Spot gold was down 0.3 per cent at $1,923.74 per ounce, as of 0321 GMT, hitting its lowest since April 7. US gold futures were down 0.6 per cent at $1,923.30.
Spot silver dipped 1 per cent to $23.89 per ounce, platinum eased 0.4 per cent to $927.00, and palladium fell 2.9 per cent to $2,305.69.