Gold futures on MCX were trading higher 0.34 per cent or Rs 156 at Rs 45,925 per 10 gram. Also, silver futures were up by 0.14 per cent or Rs 79 at Rs 58,465 per kg.
The yellow metal declined on stronger dollar and Federal Reserve’s tapering expectations. The dollar index rallied to a 11-month high weighing demand for gold.
The recent hint from US Fed chairman Jerome Powell has increased chances of some timeline for an end of its asset purchase program in the November meeting.
Ravindra Rao, CMT, EPAT, VP – Head Commodity Research at Kotak Securities, said gold inched up today as the US dollar index paused after its recent rally to a one-year high. Mixed economic data, concerns about China, rising inflation pressure and US debt ceiling debate is supporting the price.
“However, weighing on price is continuing ETF outflows which show weaker investor interest. Increasing expectation of Fed’s monetary tightening is weighing on price. Gold is witnessing some relief rally. However, it may not sustain,” he added.
Bullion is considered as a hedge against inflation and currency debasement likely resulting from the widespread stimulus. A hawkish move by the Fed would diminish gold’s appeal.
The dollar index hit a near one-month high, hurting gold’s appeal for holders of other currencies. Higher interest rates raise the opportunity cost of holding non-interest bearing gold.
In the spot market, highest purity gold was sold at Rs 46,238 per 10 gram while silver was priced at Rs 59,852 per kg on Wednesday, according to the Indian Bullion and Jewellers Association.
The spot price of the yellow metal has gained slightly, whereas silver also inched up compared to the previous session.
Sandeep Matta, Founder, TRADEIT Investment Advisor, said, “The combination of higher treasury yields, strong dollar, inflation fear and risk off sentiments in the marketplace are the key reasons for underperformance in gold.”
Trading strategy
“We expect gold prices to trade down for the day with COMEX Spot gold support at $1,720 and resistance at $1,750 per ounce. MCX Gold December support lies at Rs 45,500 and resistance at Rs 46,000 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Global markets
Spot gold was up 0.2% at $1,729.83 per ounce by 0054 GMT. Prices fell to their lowest level since August 9 at $1,720.49 on Wednesday. US gold futures were up 0.4% at $1,729.20.
Silver rose 0.3% to $21.58 per ounce. Platinum gained 0.4% to $954.08 and palladium was up 0.3% at $1,862.23.
