New Delhi: Gold prices were trading flat on Friday, headed for a straight second weekly gain as the US economic data fanned expectations that the Fed might ease the pace of raising interest rates.
The US economy rebounded strongly in the third quarter amid a shrinking trade deficit, but the data overstated the nation’s economic health as domestic demand was the weakest in two years.
The Fed is expected to announce another 75 basis-point rate increase at its meeting next week, although the central bank is seen slowing its aggressive pace in December.
Gold futures on
were trading flat, rising marginally by 0.08% or Rs 43 at Rs 50,780 per 10 grams. Similarly, silver futures were trading higher by 0.29% or Rs 171 at Rs 58,449 per kg.
Gold is considered a hedge against inflation but higher interest rates increase the opportunity cost of holding the zero-yield bullion, while boosting the dollar and bond yields.
Gold and silver traded flat as focus shifted to US PCE price index numbers which could offer more clarity on the Fed rate-hike path, said Sriram Iyer, Senior Research Analyst at
Securities.
“Markets have been factoring in a 75 bps in November but a smaller interest rate hike in December,” he said. “This has lent some support to prices.”
Top gold consumer China’s economy rebounded at a faster-than-anticipated clip in the third quarter, but a more robust revival in the longer term will be challenged by persistent COVID-19 curbs, a prolonged property slump and global recession risks.
In the spot market, the highest purity gold was sold at Rs 50,779 per 10 grams while silver was priced at Rs 57,640 per kg on Thursday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have dropped less than Rs 1,000 in the last three weeks, whereas the silver in the spot market has eased about Rs 3,200 per kg during the same period under review.
Trading Strategy
Gold has support at $1,654-1,642, while resistance is at $1,678-1,688. Silver has support at $19.34-19.15, while resistance is at $19.82-19.95, said Rahul Kalantri, VP Commodities, Mehta Equities.
“In rupee terms, gold has support at Rs 50,520-50,350, while resistance is at Rs 50,840, 51,080. Silver has support at Rs 57,570-56,980, while resistance is at Rs 58,680–58,980,” he added.
Global markets
Spot gold was flat at $1,663.22 per ounce, as of 0130 GMT but it was up 0.4% for the week so far. US gold futures were unchanged at $1,666.
Spot silver eased 0.2% to $19.54 per ounce, platinum rose 0.2% to $962.03 and palladium gained 0.5% to $1,951.07.
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