The US dollar index hovered close to a 16-month high, pressuring bullion by increasing its cost to buyers holding other currencies.
Gold futures on MCX were trading lower by 0.23 per cent or Rs 114 at Rs 49,200 per 10 grams. Silver futures were down 0.90 per cent or Rs 601 at Rs 66,543 per kg.
Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities said gold has tested June highs but is struggling to build momentum as support from increased demand as an inflation hedge and choppiness in equities is countered by firmness in US dollar index, fear of Fed’s monetary tightening and weaker investor interest.
In the spot market, the highest purity gold was sold at Rs 49,003 per 10 grams while silver was priced at Rs 66,285 per kg on Friday, according to the Indian Bullion and Jewellers Association.
The spot price of gold has jumped more than Rs 1,300 per 10 grams in the last one week, whereas silver has risen over Rs 2,700 per kg during the period under review.
Ravi Singh, Vice President & Head of Research, Share India said that past weeks have been highly volatile for gold prices due to improved macro indicators, stronger US dollar, the expectation of early Fed bond tapering and higher US Treasury yields.
“However, the arising challenges in the stable recovery of global economies and the demand in the festival season has somehow maintained the upthrust in safe-haven appeal and pushed gold to higher levels,” he added.
Trading strategy
“We expect gold prices to trade sideways to up for the day with COMEX Spot gold support at $1,840 and resistance at $1870 per ounce. MCX Gold December support lies at Rs 48,900 and resistance at Rs 49,700 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Global markets
Spot gold fell 0.3 per cent to $1,857.96 per ounce by 0154 GMT, while U.S. gold futures dropped 0.4 per cent to $1,860.50 per ounce.
Spot silver fell 1.1 per cent to $25.00 per ounce. Platinum dropped 0.6 per cent to $1,075.91 and palladium was down 0.9 per cent at $2,088.96.
