Despite the economic optimism, Federal Reserve policymakers seem unlikely to budge on their accommodative stance yet and investor inflation fears should boost gold. US 10-year Treasury yields slipped.
Gold headed for a 2.5 per cent weekly gain, the most since December, as the weaker dollar and easing Treasury yields propelled the precious metal as an inflation hedge. Silver outperformed the yellow metal in early trade.
The dollar index fell 0.4 per cent, making gold more attractive for those holding other currencies.The dollar index, US dollar’s gauge against six other major currencies stood near its lowest level so far this week.
Gold futures on MCX were up 1.23 per cent or Rs 580 at Rs 47,580 per 10 grams. Silver futures rose 2.85 per cent or Rs 1,981 to Rs 71,600 per kg.
“COMEX gold trades mixed near $1815/oz after a sharp 1.8 per cent gain yesterday. Supporting gold price is weaker US dollar, loose monetary policy stance of major central banks and Fed’s warning about stretched valuation in many asset classes. However, weighing on price is the lack of ETF buying and concerns about consumer demand in India,” said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
“Gold may remain volatile along with gold as market players assess Fed’s monetary policy but general bias remains positive. Focus for the day would be US non-farm payrolls data that might keep gold volatile.”
In the spot market, highest purity gold was sold at Rs 46,992 while silver was priced at Rs 69,300 on Tuesday, according to the Indian Bullion and Jewellers Association.
Trading strategy
“We expect gold prices to trade sideways to up for the day with COMEX gold support at $1790 and resistance at $1840 per ounce. MCX Gold June support lies at Rs. 47200 and resistance at Rs. 47900 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Global markets
Spot gold was steady at $1,814.33 per ounce by 0028 GMT, after hitting its highest since Feb 16 at $1,817.90 in the previous session. Investors cautiously await US monthly jobs reports.
Palladium eased 0.1 per cent to $2,942.82 per ounce, moving further away from an all-time high of $3,017.18 hit earlier this week. Silver edged 0.1 per cent lower to $27.26 per ounce, while platinum was steady at $1,252.41.
