NEW DELHI: Gold prices extended their fall on Tuesday as a firm dollar and prospects of further oversized rate hikes by the US Federal Reserve dented the zero-yielding asset’s appeal.
After stronger-than-expected US labour data, the focus is now on the inflation reading, due on Thursday, which is expected to remain stubbornly high.
Gold futures on
were trading lower by 0.32 per cent or Rs 162 at Rs 50,861 per 10 grams. Silver futures tumbled by 0.67 per cent or Rs 396 at Rs 58,706 per kg.
While gold is considered a hedge against inflation and economic uncertainties, rising interest rates reduce the appeal for the asset, which pays no interest.
Gold prices dropped on an elevated dollar and solidifying bets for an aggressive interest rate hike from the US Federal Reserve, said ICICIDirect Research. “A sharp rise in US 10 year’s treasury yields pressurised bullion prices.”
Gold prices are expected to trade with a negative bias for the day amid a strong US dollar. It is likely to break the key support, it added. “Silver prices are likely to take cues from gold prices and trade in a downward trend.”
In the spot market, the highest purity gold was sold at Rs 51,120 per 10 grams while silver was priced at Rs 58,949 per kg on Monday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have remained above Rs 51,000 per 10 grams for a week now, whereas silver has plunged almost Rs 2,100 per kg in the same period under review.
Trading Strategy
“Gold has support at $1,655-1,642, while resistance at $1,678-1,686. Silver has support at $19.10-18.88, while resistance is at $19.72-19.95,” said Kalantri from Mehta Equities.
In rupee terms, gold has support at Rs 50,720-50,540, while resistance is at Rs 51,210, 51,350 and silver has support at Rs 58,450-57,940, while resistance is at Rs 59,480–59,850, he added.
Global markets
Spot gold was flat at $1,668.29 per ounce, as of 0143 GMT. Prices fell 1.6 per cent on Monday, their biggest one-day percentage decline since September 23. US gold futures rose 0.3 per cent to $1,679.60 per ounce.
Spot silver fell 0.4 per cent to $19.57 per ounce, platinum dipped 0.1 per cent to $897.50 and palladium rose 0.2 per cent to $2,176.00.
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