Silver followed suit, plummeting by as much as Rs 3,568 or 4.99 per cent to Rs 67,900 per kilogram.
At 7:48 pm, MCX gold futures (August 5) traded 3.09 per cent lower at Rs 47,008 per 10 grams while silver futures (July 5) were down 4.48 per cent at Rs 68,264 per kilogram.
Analysts say the surge in the US currency and yields in reaction to the Federal Reserve’s projection of earlier interest rate increases put pressure on bullion rates.
“Fed’s stance is negative for gold, however, the market reaction may subside as the US central bank is not looking at any imminent measures,” said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.
In the international markets, spot gold hit a six-week low of $1,785.87 per ounce, and was last seen trading down 1.32 per cent at $1,787.77 per ounce. Silver was down 2.23 per cent at $26.40 per ounce.
Back home, spot gold dropped by Rs 861 to Rs 46,863 per 10 grams in New Delhi. The white metal slumped by Rs 1,709 to Rs 68,798 per kg.
Technically, analysts expect support for gold at Rs 47,000 per 10 grams and for silver at Rs 67,200 per kg.
A majority of Fed officials projected at least two quarter-point rate rises for 2023. However, the US central bank pledged to keep policy supportive for now to encourage a jobs recovery.
“The hawkish stance pushed the dollar higher against major currencies, triggering selling in gold prices. The stronger dollar may continue to put pressure on the yellow metal, dampening its safe-haven appeal in the short term,” said Tapan Patel, Senior Analyst (Commodities) at HDFC Securities.
Higher interest rates tend to affect gold’s appeal as a safe-haven asset as they increase the opportunity cost of holding bullion.
The rupee depreciated by 76 paise against the dollar to settle at the weakest level of the day at 74.08. The dollar index — which gauges the greenback against six major currencies — was up 0.60 per cent at 91.757, having risen to as high as 91.832 earlier on Thursday.
Technical outlook
Patel of HDFC Securities expects gold to move sideways to down for the day with support for MCX gold expected at Rs 47,200 and resistance at Rs 47,800 per 10 grams.
Kshitij Purohit, Product Manager, Currency & Commodities at CapitalVia Global Research, pegs support for MCX gold at Rs 47,000 and then Rs 46,800 for the evening session. For silver, he expects support at Rs 68,200, followed by Rs 67,600 and Rs 67,100.
Should you take positions?
“We suggest selling silver below Rs 71,000 with a stop loss of Rs 71,700 for a target of Rs 69,800,” said Manoj Kumar Jain, Director-Head of Commodity Research, Prithvi Finmart. He recommends selling gold below Rs 48,200 for a target of Rs 47,500 with a stop loss at Rs 48,600.
Ajay Kedia, Founder and Director of Kedia Advisory, suggests traders to wait before taking fresh long positions. He recommends selling the yellow metal contract at Rs 47,400 for a target of Rs 46,800 over the next one week with a stop loss at Rs 47,800.
