The dollar index rebounded on Monday after data showed that the US services industry activity unexpectedly picked up in November, prompting speculation that the Fed may lift interest rates more than recently projected.
Gold futures on
were trading higher, rising 0.33% or Rs 175 at Rs 53,680 per 10 grams. However, silver futures rose 0.72% or Rs 471 to Rs 65,657 per kg.
“Yields rose as improved services PMI data and solid job reports reinforced expectations that the Fed will continue to raise interest rates well into 2023,” said ICICI Direct Research.
“Gold prices are expected to trade with a negative bias for the day amid strong dollar and surge in US treasury yields,” it said. “Upbeat economic data from the US fuelled expectations among investors that peak for the Fed funds will be higher than anticipated,” it added.
Gold is seen as a hedge against inflation, which rising rates aim to tackle, thereby diminishing the metal’s appeal. Higher interest rates also make other assets more attractive compared with non-interest-bearing bullion.
Physical gold demand stalled in India last week on higher prices, while premiums fell in top consumer China as Covid-19 restrictions dulled activity.
In the spot market, the highest purity gold was sold at Rs 53,854 per 10 grams while silver was priced at Rs 65,764 per kg on Monday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have jumped about Rs 1,500 per 10 grams in the last two weeks, whereas silver has gained more than Rs 5,300 per kg during the same period under review.
Rahul Kalantri, VP Commodities, Mehta Equities said that gold and silver prices traded sharply lower in evening trades on Monday after hitting multi-month highs in the morning session.
“Metal prices were hit by heavy profit taking from the shorter-term futures traders and bearish markets,” he said.
“Bullion charts are now showing some profit booking and looking overbought. Momentum Indicator RSI 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 53,750-54,000 and Rs 65,900-66,300, respectively. He also advised profit booking near support levels at Rs 53,400-53,050 and Rs 65,000-64000, respectively.
Spot gold was up 0.4% at $1,775.69 per ounce as of 0224 GMT. US gold futures rose 0.3% to $1,787.10.
Spot silver climbed 1.2% to $22.52. Platinum was up 0.5% to $1,002.50 and palladium gained 0.6% to $1,886.63.
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