NEW DELHI: Gold prices were subdued on Tuesday as rising US Treasury yields countered support from a weaker dollar and investors awaited US consumer price data to gauge inflation. The deteriorating health crisis in India also led to gains.
Benchmark US 10-year Treasury yields rose for a third straight day, increasing the opportunity cost of holding non-interest bearing bullion. Weaker dollar is a positive for the metals market. At a time of heavy government stimulus, gold is considered as a hedge against potential inflation.
Investors were also awaiting the US consumer price index for April, due on Wednesday, to gauge whether the Federal Reserve will begin to alter its stance on inflation.
The dollar, which hobbled to a 10-week low, on concerns that mounting price pressures could erode its value, also narrowed some of its earlier losses. The dollar index, which measures the greenback against six major currencies, was little changed at 90.219, after touching a two-month low of 89.979.
Physical gold demand in India dived last week as shops in major states have remained locked and people turned cautious due to surging coronavirus infections across the world’s second-largest bullion consumer.
Gold futures on MCX were down 0.32 per cent or Rs 152 at Rs 47,,481 per 10 grams. Silver futures fell 0.74 per cent or Rs 529 to Rs 71,400 per kg.
“Gold prices traded weak with spot gold prices at COMEX were trading near $1834 per ounce in the morning trade. The yellow metal witnessed some selling keeping to a range bound movement as investors and traders are awaiting key US inflation data and 10 year bond auction. Gold prices traded under pressure on stronger dollar on mixed global cues,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
In the spot market, highest purity gold was sold at Rs 47,789 while silver was priced at Rs 70,969 on Tuesday, according to the Indian Bullion and Jewellers Association.
Trading strategy
“We expect gold prices to trade sideways to down for the day with COMEX gold support at $1820 and resistance at $1850 per ounce. MCX Gold June support lies at Rs. 47500 and resistance at Rs. 48000 per 10 gram,” added Patel.
Global markets
Spot gold was down 0.1 per cent at $1,833.00 per ounce by 0721 GMT, after hitting its highest since Feb 11 at $1,845.06 on Monday. US gold futures fell 0.2 per cent to $1,834.20 per ounce.
Palladium was up 0.1 per cent at $2,961.52 per ounce, silver was down 0.1 per cent at $27.29, while platinum fell 0.4 per cent to $1,241.64.