Most investors expect the Fed to deliver a 50-basis point rate hike at its final meeting of 2022 scheduled on December 13-14, 2022. Market participants also await the November Consumer Price Index (CPI) report.
Gold futures on
were trading flat, gaining marginally 0.05% or Rs 26 at Rs 54,013 per 10 grams. However, silver futures dropped 0.20% or Rs 130 at Rs 66,137 per kg.
High interest rates have weighed on gold’s traditional status as a hedge against inflation and other uncertainties this year which further translate into higher opportunity cost of holding the non-yielding metal.
Ravindra Rao, CMT, EPAT VP-Head Commodity Research, Kotak Securities, said that the US dollar retreated after testing a high near 105.80 whereas the US 10-year bond yields slipped to two and half month lows.
“The major factor supporting gold is the expectation of a lower rate hike pace by the Fed,” he said. “The Fed has indicated that the rate hike might go on for longer than previously expected,” he added.
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, highest purity gold was sold at Rs 53,583 per 10 grams while silver was priced at Rs 64,718 per kg on Wednesday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have jumped about Rs 1,200 per 10 grams in the last two weeks, whereas silver has gained more than Rs 3,000 per kg during the same period under review.
Rahul Kalantri, VP Commodities, Mehta Equities, said that gold and silver prices rose on Wednesday amid an increasing number of warnings that rising interest rates and stubborn inflation will cause a US recession in 2023.
An inversion in the US yield curve was also perceived by several market participants as an indicator of an impending recession, he added. “Gold has largely lost its safe haven status this year,” he said.
Bullions 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 54,050-54,280 and Rs 66,500-67,000, respectively. He also advised profit booking near support levels at Rs 53,800-53,500 and Rs 65,700-65,000, respectively.
Spot gold fell 0.2% to $1,783.50 per ounce, as of 0248 GMT, after rising more than 1% on Wednesday supported by a pullback in the dollar and U.S. bond yields. US gold futures were down 0.2% to $1,795.10.
Spot silver inched 0.6% lower to $22.60, platinum lost 0.2% to $1,000.67 and palladium was flat at $1,844.20.
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