A stronger dollar and expectations of more rate hikes from the US Federal Reserve to tame surging inflation weighs on the sentiments for the yellow metal. A 50 basis point rate hike is anticipated by the Fed in September.
Gold futures on
were trading lower by 0.22 per cent or Rs 112 at Rs 51,367 per 10 grams. However, silver futures dropped 0.37 per cent or Rs 206 at Rs 55,290 per kg.
The dollar rose to a more one-month high against its rivals, making gold more expensive for buyers holding other currencies. Benchmark treasury yields rose to their highest in a month, increasing the opportunity cost of holding gold.
Pritam Patnaik, Head – Commodities, Axis Securities said gold prices continued to fall on hawkish statements from the Fed officials. The central bank is adamant about using brute monetary tightening to reign in runaway inflation.
One can expect the US Fed to continue its aggressive rate hike plans. The market estimates a minimum of 50 basis points and a max of 75 basis point hike in the Fed’s September meeting, he added.
Gold demand in India improved last week as domestic prices dropped to a more than two-week low, while volumes were sombre in other Asian centres.
In the spot market, the highest purity gold was sold at Rs 51,802 per 10 grams while silver was priced at Rs 55,881 per kg on Friday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have dropped below Rs 52,000 per 10 grams after 9 sessions, whereas silver tumbled about Rs 2,500 per kg in the last one week, the data suggests.
Ravi Singh, Vice President and Head of Research, ShareIndia said that the most anticipated Jackson Hole symposium, scheduled from 25-27 August, will provide cues for gold prices.
“The Fed chair may guide on future rate hikes and fiscal tightening to curb inflation,” he added. “Third estimate of the US Q2 GDP data is also scheduled to be released this week. All these factors may keep the gold prices volatile.”
“We expect gold prices to trade sideways to down for the day with COMEX spot gold support at $1,730 and resistance at $1,760 per ounce. MCX Gold October futures support lies at Rs 51,100 and resistance at Rs 51,800 per 10 grams,” said Tapan Patel, Senior Analyst (Commodities),
Spot gold was flat at $1,747.55 per ounce, as of 0318 GMT, after hitting its lowest since July 28 at $1,743.83 in early Asian trading. US gold futures eased 0.1 per cent to $1,761 per ounce.
Spot silver gained 0.5 per cent to $19.12 per ounce, platinum edged 0.1 per cent higher to $896.74, and palladium rose 1 per cent to $2,145.90.
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