NEW DELHI: Gold prices edged lower on Wednesday, as an uptick in the dollar and US treasury yields limited bullion’s appeal, with investors looking ahead to US inflation data for more direction on interest rates.
Gains in gold were capped as central banks worldwide tightened monetary policy to cool surging prices. Investors await the core consumer price index (CPI) data due on Friday for implications on US interest rates.
Gold futures on
were trading with a decline of 0.13 per cent or Rs 68 at Rs 50,900 per 10 grams. However, silver futures dropped 0.19 per cent or Rs 118 at Rs 62,125 per kg.
Bullion is used as a hedge against inflation, but higher interest rates increase the opportunity cost of holding the non-yielding asset. The World Bank slashed its 2022 global growth forecast on Tuesday by nearly a third to 2.9 per cent.
Pritam Patnaik, Head – Commodities, Axis Securities said that gold traders are awaiting the US inflation report, due this week for establishing any clear trade in the metal.
“While a higher inflationary set up supports gold prices, an aggressive interest rate hike by all central banks is negative for the non-interest yielding asset like gold. Expect range-bound trade to continue,” he added.
In the spot market, the highest purity gold was sold at Rs 51,089 per 10 grams while silver was priced at Rs 62,052 per kg on Tuesday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have gained more than Rs 800 per 10 grams in the last three weeks, whereas silver has jumped more than Rs 2,000 per kg in the same period under review.
Ravi Singh, Vice President and Head of Research, ShareIndia said gold prices are rising due to weaker equities and geopolitical tensions.
“The dollar is easing again and will continue to support gold until there is some hawkish policy tightening by major central banks,” he added. “The ECB meeting outcome is most awaited to get a clear trend in gold.”
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“We expect gold prices to trade sideways to up for the day with COMEX Spot gold support at $1,840 and resistance at $1,860 per ounce. MCX Gold Aug support lies at Rs 50,700 and resistance at Rs 51,200 per 10 grams,” said Tapan Patel, Senior Analyst (Commodities),
Securities.
Global markets
Spot gold was down 0.2 per cent at $1,848.75 per ounce, as of 0302 GMT, while US gold futures were flat at $1,851.20.
In other metals, platinum dipped 0.1 per cent to $1,009.85 an ounce and palladium rose 0.8 per cent to $2,000.19. Silver eased 0.3 per cent to $22.14.