Data showed US consumer prices rose solidly in May, leading to the biggest annual increase in nearly 13 years. Investors awaited the US central bank’s June 15-16 policy meeting for further clarity on the policymakers’ view on rising inflation and recovery in the world’s largest economy.
The dollar rose 0.1 per cent to hover near a one-week high against its rivals, making the yellow metal more expensive for holders of other currencies. Some investors view gold as a hedge against higher inflation that could follow stimulus measures.
Demand for physical gold crept up last week in top hubs India and China though dealers were still forced to offer discounts, while businesses limped back to life in India as some Covid-19 restrictions were eased.
Gold futures on MCX were down 0.62 per cent or Rs 303 at Rs 48,600 per 10 grams. Silver futures shed 0.62 per cent or Rs 449 to Rs 71,778 per kg.
“COMEX gold trades 0.5 per cent lower near $1867/oz after a 0.9 per cent decline on Friday. Gold remained under pressure as the US dollar held steady and US bond yields recovered amid positioning for Fed meeting this week,” said Ravindra Rao, CMT, EPAT, VP-Head Commodity Research, Kotak Securities.
In the spot market, gold of highest purity was sold at Rs 49,028 while silver was priced at Rs 72,139 on Friday, according to the Indian Bullion and Jewellers Association.
“Mixed ETF flow and weaker Indian consumer demand also weighed on prices. Gold may remain under pressure amid firmer US dollar however a sharp fall is unlikely as Fed is likely to maintain a dovish stance,” Rao added.
Trading strategy
“We expect gold prices to trade sideways to down for the day with COMEX gold support at $1,850 and resistance at $1,880 per ounce. MCX Gold August support lies at Rs. 48600 and resistance at Rs 49,200 per 10 grams,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Global markets
Spot gold was down 0.5 per cent at $1,867.51 per ounce, as of 0119 GMT, its lowest since June 4. US gold futures fell 0.5 per cent to $1,871.10 per ounce.
Silver slipped 0.4 per cent to $27.78 per ounce, palladium eased 0.1 per cent to $2,773.19, while platinum dipped 0.8 per cent to $1,141.
