New Delhi: Gold prices were flat on Wednesday, nearing one-week high after a sharp run-up in the previous session led by the weakness in the US dollar after Bank of Japan’s (BOJ) surprise policy tweak.
The dollar index was flat after falling on Tuesday as the yen jumped to a four-month high after the BOJ’s surprise decision to loosen its tight leash on government bond yields.
Last week, Federal Reserve Chair, Jerome Powell, said that the US central bank will deliver more rate hikes next year, even as the economy slips towards a possible recession
Gold futures on
were trading flat, with mild gains of 0.06% or Rs 32 at Rs 54,930 per 10 grams. Silver futures ticked up by 0.08% or Rs 53 at Rs 69,695 per kg.
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“The dollar index slid below 104 after the Bank of Japan’s surprise policy tweak,” said ICICI Direct Research. “However, sharp upside was capped on a surge in US treasury yields,” it added.
Gold prices are expected to trade with a positive bias for the day amid a weaker dollar and risk aversion in global markets. Gold Prices may rally on expectations of disappointing economic data from the US, it added.
High-interest rates have weighed on gold’s traditional status as a hedge against inflation and other uncertainties this year, as they translate into a higher opportunity cost of holding the non-yielding metal.
Gold prices edged up as US services PMI slumped to 44.4 in December 2022, well below market expectations of 46.8. The latest data signalled the fastest pace of contraction in the service sector for four months, said ICICIDirect Research.
“Sharp upside was capped on rise in US treasury yields and strong US dollar,” it said. “Gold prices are expected to trade with a negative bias for the day amid strong dollar and rise in US treasury yields,” it added.
Investors also took stock of news that in top bullion consumer China, Covid-19 is sweeping through trading floors in Beijing and spreading fast in the financial hub of Shanghai. The country reported five new COVID deaths for December 19.
In the spot market, the highest purity gold was sold at Rs 54,505 per 10 grams while silver was priced at Rs 67,849 per kg on Tuesday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have jumped about Rs 1,750 per 10 grams in the last three weeks, whereas silver has breached Rs 6,200 per kg in the same period under review.
NS Ramaswamy, Head of Commodities,
Securities said that the gold is trading flat after a rally as the yellow metal gained after the yen jumped to a four-month high.
“The dollar index weakened nearly 1 percent to the low of 103.4 after the news (BoJ), supporting the precious metal,” he said.
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“We expect bullion prices to remain volatile in today’s session. Gold has support at $1,805-1,792 while resistance is at $1,828-1,840. Silver has support at $23.82-23.55, while resistance is at $24.48-24.65,” said Rahul Kalantri, VP Commodities, Mehta Equities.
In rupee terms, gold has support at Rs 54,550-53,350, while resistance is at Rs 54,980-55,110. Silver has support at Rs 69,050-68,580, while resistance is at Rs 70,120–70,680, he added.
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Spot gold was flat at $1,816.94 per ounce as of 0031 GMT. US gold futures were up 0.1% at $1,827.10.
Spot silver fell 0.2% to $24.12, platinum lost 0.2% to $1,006.16 and palladium rose 0.1% to $1,734.03.
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