US consumer confidence jumped as growing labour market optimism amid a reopening economy offset concerns about higher inflation. The US Labor Department’s nonfarm payrolls data on Friday is expected to show a gain.
The supply chain imbalances and higher demand currently leading to higher inflation are transitory and the Fed has the tools to respond if inflation remains elevated for longer than anticipated. Bullion tends to fall out of favour amid tighter monetary policy.
The dollar index strengthened 0.2 per cent against rivals, making the precious metal expensive.
Despite the price dip, retail gold demand in India, the world’s second largest consumer of physical gold, has remained weak. The biggest risk that investors are talking about is inflation as prices are picking up faster than usual.
Gold futures on MCX were up merely 0.06 per cent, or Rs 28, at Rs 46,583 per 10 gram. Silver futures gained 0.14 per cent, or Rs 94, to Rs 68,368 per kg.
Gold prices traded firm on Wednesday with COMEX spot gold prices trading near $1,763 per ounce in morning trade. The yellow metal halted decline after falling to a two-month low on Tuesday, said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
In the spot market, highest purity gold was sold at Rs 47,008, while silver was priced at Rs 67,806 on Tuesday, according to the Indian Bullion and Jewellers Association.
“Gold prices witnessed selling on dollar rally on expectations of early Fed tapering of bond buying program. The dollar index rose above 92 mark weighing gold buyers,” Patel said.
Trading strategy
“We expect gold prices to trade sideways to down for the day, eyeing US data with COMEX spot gold support at $1,750 and resistance at $1,780 per ounce. MCX Gold August support lies at Rs 46,200 and resistance at Rs 46,800 per 10 gram,” he said.
Global markets
Spot gold was steady at $1,761.80 per ounce, as of 1231 GMT. US gold futures fell 0.1 per cent to $1,761.80. For the month, prices were down 7.6 per cent. For the quarter, gold had risen 3.2 per cent.
Silver rose 0.3 per cent to $25.81 per ounce. Palladium gained 0.4 per cent at $2,686.81 and was headed for a fourth straight quarterly gain. Platinum rose 0.2 per cent to $1,068.96, and was set to post its worst quarter and month since March last year.
