The inflation numbers are positively affecting gold prices and the momentum is likely to continue going forward. Data showed fewer Americans filed new claims for unemployment benefits last week. Meanwhile, producer prices increased more than expected in April.
Meanwhile benchmark U.S. 10-year Treasury yields eased after four straight days of gains, decreasing the opportunity cost of holding non-interest bearing bullion. A weaker dollar is positvie for the metals market. At a time of heavy government stimulus, gold is considered a hedge against potential inflation, but elevated Treasury yields have dulled bullion’s appeal this year.
Against a basket of major currencies, the dollar was steady at 90.718, largely holding on to gains eked out on Wednesday. A firm dollar capped gains in the euro, which edged up 0.1% to $1.20805.
Physical gold demand in India dived last week as shops in major states have remained locked and people turned cautious due to surging coronavirus infections across the world’s second-largest bullion consumer.
Gold futures on MCX were down 0.13 per cent or Rs 63 at Rs 47,375 per 10 grams. Silver futures fell 0.09 per cent or Rs 64 to Rs 70,467per kg.
“Gold prices traded steady with spot gold prices at COMEX were trading near $1820 per ounce in the morning trade. The yellow metal halted two days decline supported by some ease in US bond yields. Gold prices are getting support from inflation worries while stronger equity indices have capped upside,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities
In the spot market, highest purity gold was sold at Rs 47,764 while silver was priced at Rs 70,948 on Wednesday, a day before the holiday, according to the Indian Bullion and Jewellers Association.
Trading strategy
“We expect gold prices to trade sideways to down for the day on mixed global cues with COMEX gold support at $1800 and resistance at $1840 per ounce. MCX Gold June support lies at Rs. 47100 and resistance at Rs. 47800 per 10 gram,” added Patel.
Global markets
Spot gold was down 0.1 per cent at $1,833.00 per ounce by 0721 GMT, after hitting its highest since Feb. 11 at $1,845.06 on Monday. U.S. gold futures fell 0.2 per cent to $1,834.20 per ounce.
Palladium rose 0.1 per cent to $2,859.13 per ounce, having hit a three-week low. Silver was flat at $27.03 per ounce, while platinum fell 0.8 per cent to $1,200.31.
