Data showed US consumer prices rose solidly in May, the biggest annual increase in nearly 13 years, while weekly jobless claims dropped to their lowest in nearly 15 months last week. Investors are not freaking out over a spike in US inflation, showing confidence that the Fed is handling a rebound in economic growth.
The dollar index fell to 90.057 after hitting a near one-week high. The benchmark US 10-year Treasury yields dropped to a three-month low, reducing the opportunity cost of holding non-interest bearing bullion.
The buyers of the safe-haven metal are putting their bets via ETFs. The demand for physical yellow metal is likely to increase in coming months in the world’s second largest bullion market.
Gold futures on MCX were up by 0.14 per cent or Rs 68 at Rs 49,266 per 10 grams. Silver futures gained 0.46 per cent or Rs 330 to Rs 72,329 per kg.
“COMEX gold trades modestly higher above $1900/oz after a largely flat close yesterday. Gold trades higher supported by choppiness in the US dollar and sharp decline in US bond yield in reaction to US inflation data,” Ravindra Rao, CMT, EPAT, VP-Head Commodity Research, Kotak Securities.
In the spot market, highest purity gold was sold at Rs 48,750 while silver was priced at Rs 71,224 on Thursday, according to the Indian Bullion and Jewellers Association.
“ETF inflows also show buying interest in the metal. However, weighing on price is weaker Indian consumer demand and general improvement in global growth outlook. Gold has rescaled $1900/oz and may trade with a positive bias unless there is a strong rise in US dollar and bond yields.”
Trading strategy
“We expect gold prices to trade sideways to up for the day with COMEX gold support at $1880 and resistance at $1920 per ounce. MCX Gold August support lies at Rs. 48900 and resistance at Rs. 49500 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Global markets
Spot gold was up 0.1 per cent at $1,899.28 per ounce, as of 0059 GMT. Prices have risen 0.5 per cent so far this week. US gold futures rose 0.3 per cent to $1,901.20 per ounce.
Silver was steady at $27.96 per ounce, palladium slipped 0.5 per cent to $2,763.87, while platinum edged 0.1 per cent lower to $1,150.31.
