The Fed on Wednesday raised interest rates by 50 basis points. Fed Chair Jerome Powell said that the central bank would deliver more hikes next year even as the economy slips towards a recession.
Gold futures on
were trading mildly lower by 0.09% or Rs 50 at Rs 54,057 per 10 grams. Silver futures tanked 0.36% or Rs 244 at Rs 67,574 per kg.
NS Ramaswamy, Head of Commodities,
Securities said the European Central Bank on Thursday followed the Fed in slowing the pace of interest rate increases but also signalled towards tightening financial conditions.
High-interest rates have weighed on gold’s traditional status as a hedge against inflation and other uncertainties this year, as they translate into a higher opportunity cost of holding the non-yielding metal.
ICICI Direct Research said, “Gold prices are expected to trade with a negative bias for the day amid a strong dollar.”
“Expectations of higher interest rates for a longer period by the US Fed will hurt the yellow metal,” it added.
Gold premiums in China rose last week as demand picked up after the top consumer eased COVID-19 restrictions, while high prices muted activity in India.
India plans to invite bids to extract gold from 50 million tonnes of processed ore in a cluster of colonial-era mines in the southern state of Karnataka, PTI reported citing a government official with direct knowledge of the matter.
In the spot market, the highest purity gold was sold at Rs 53,894 per 10 grams while silver was priced at Rs 66,568 per kg on Thursday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have dropped below Rs 54,000 per 10 grams after two sessions, whereas silver has tumbled as much as Rs 1,100 per kg in just one session.
Rahul Kalantri, VP Commodities, Mehta Equities said that bullion prices were lower due to profit-taking from shorter-term futures traders amid sharp gains in the US dollar index.
“The European Central Bank and the Bank of England monetary policy on Thursday raised their main interest rate by 0.5%, in tandem with the US Federal Reserve’s half-point rate hike a day before,” he added.
“Bullion charts are now showing some profit booking and looking overbought. Momentum indicator RSI is also indicating the same,” said Amit Khare, AVP- Research Commodities, Ganganagar Commodity. He advised traders to make fresh short positions.
He suggested selling gold and silver near given resistance levels at Rs 54,300-54,500 and Rs 68,400-69,000, respectively. He also advised profit booking near support levels at Rs 54,000-53,800 and Rs 67,400-66,700, respectively.
Spot gold rose 0.2% to $1,780.63 per ounce, as of 0230 GMT, but was down nearly 1% so far in the week. US gold futures were up 0.1% at $1,789.40.
Spot silver rose 0.2% to $23.09 per ounce, but was down 1.5% for the week. Platinum gained 0.5% to $1,011.63. Palladium rose 1.1% to $1,810.51 but was headed for its biggest weekly drop in two months.
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