Gold prices rose, nearing three month high in Wednesday’s trade as cooling US inflation signalled bets for smaller rate hikes. Rekindled geopolitical tensions due to missile blast in Poland also pushed gold prices higher.
Gold futures on
were trading up by 0.48% or Rs 254 at Rs 52,999 per 10 grams. Similarly, silver futures jumped 0.68% or Rs 420 at Rs 62,010 per kg.
Gold is seen as a hedge against inflation, which rising rates aim to tackle, thereby diminishing the metal’s appeal. Higher interest rates also make other assets more attractive compared to non-interest-bearing bullion.
Gold prices rose amid weakness in the dollar and on some safe-haven buying after a missile struck a Polish village near the country’s border with Ukraine killing two people, said ICICIDirect Research.
A decline in US treasury yields supported prices, it said. “Gold prices are expected to trade with a positive bias for the day on the back of weakness in the dollar and on hopes that the US Fed will adopt less aggressive rate hikes,” it added.
A spike in domestic prices put off gold consumers in India last week and prompted dealers to offer discounts, with higher rates playing spoilsport in China as well.
In the spot market, the highest purity gold was sold at Rs 52,823 per 10 grams while silver was priced at Rs 62,270 per kg on Tuesday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have jumped more than Rs 2,350 per 10 grams in the last two weeks, whereas spot prices of silver have jumped almost Rs 3,600 per kg during the same period under review.
Gold inched higher after an alleged Russian make missile struck Polish territory, said Ravindra Rao, CMT, EPAT VP-Head Commodity Research, Kotak Securities.
“A lower PPI print has cemented the expectation of a slower pace of interest rate hike by the Fed. The focus will now shift to retail sales data due today,” he said. “A better-than-expected print would be positive for the US dollar and negative for gold and vice versa,” he added.
Trading Strategy
Rahul Kalantri, VP-Commodities, Mehta Equities said that gold has support at $1,758-1,748 while resistance is at $1,785-1,794. Silver has support at $21.38-21.22, while resistance is at $21.86-22.10, he added.
“In rupee terms, gold has support at Rs 52,570-52,350, while resistance is at Rs 52,880-53,080,” he said. “Silver has support at Rs 61,050-60,580, while resistance is at Rs 61,970–62,480,” he added.
Global markets
Spot gold held its ground at $1,776.73 per ounce, as of 0300 GMT, after rising its highest since August 15 in the previous session. US gold futures rose 0.2% at $1,780 per ounce.
Elsewhere, spot silver gained 0.3% to $21.59 per ounce. Platinum edged 0.1% higher to $1,015.46, while palladium fell 0.5% to $2,087.06.
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