NEW DELHI: Gold prices retreated mildly on Tuesday on the back of a strong dollar. However, the yellow metal was range bound as investors refrained from making big bets over Fed’s meet outcome.
Market participants are now anticipating a 75-basis-point hike by the Fed at its July 26-27 meeting. The European Central Bank and the Bank of Japan both are meeting on Thursday, with the ECB widely expected to deliver a 25-basis-point hike.
Gold futures on
retreated about 0.18 per cent or Rs 92 at Rs 50,269 per 10 grams. However, silver futures traded lower by 0.91 per cent or Rs 511 at Rs 55,580 per kg.
The dollar rose against its rivals after falling in the last two sessions, making greenback-priced bullion more expensive for buyers holding other currencies.
Although gold is seen as an inflation hedge, higher interest rates raise the opportunity cost of holding bullion, which yields no interest.
Pritam Patnaik, Head – Commodities, Axis Securities said a trifecta impact of impending US interest rate hike, strong USD, and higher bond yields have sapped potential positivity from gold bulls.
“Gold is technically in oversold territory, but with the upcoming US Fed rate decision in the coming days, no traders are willing to stick their necks out,” he added. “Money managers and retail investors seem to be reducing their longs.”
In the spot market, the highest purity gold was sold at Rs 50,667 per 10 grams while silver was priced at Rs 55,614 per kg on Monday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have remained below the Rs 51,000 mark per 10 grams in the last nine trading sessions, whereas silver has jumped about Rs 850 per kg in just one session.
Trading Strategy
“We expect gold prices to trade sideways to down for the day with COMEX Spot gold support at $1,700 and resistance at $1,720 per ounce. MCX Gold August futures support lies at Rs 50,100 and resistance at Rs 50,700 per 10 grams,” said Tapan Patel, Senior Analyst (Commodities),
securities.
Global markets
Spot gold was down 0.1 per cent at $1,707.29 per ounce, as of 0313 GMT. US gold futures fell 0.3 per cent to $1,705.10.
Elsewhere, spot silver fell 0.3 per cent to $18.61 per ounce and platinum slipped 0.6 per cent to $857.40, while palladium climbed 1.2 per cent to $1,877.89.
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