The Fed will deliver more interest rate hikes next year, even as the US economy slips towards a possible recession, Fed Chair Jerome Powell said, arguing that a higher cost would be paid if the central bank does not get a firmer grip on inflation.
Gold futures on
were trading lower by 0.58% or Rs 318 at Rs 54,356 per 10 grams. Silver futures tanked sharply by 1.67% or Rs 1,155 to Rs 68,147 per kg.
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.
Gold prices edged lower after the Federal Reserve 50 bps rate hike but signalled the terminal rate will be higher than initially expected, said ICICI Direct Research.
“However, a decline in dollar and US treasury yields prevented further downside in gold prices,” it said. “Gold is expected to trade with a negative bias for the day as the US Fed signalled more interest rate hikes next year,” 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.
In the spot market, the highest purity gold was sold at Rs 54,386 per 10 grams while silver was priced at Rs 67,642 per kg on Wednesday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have jumped over Rs 1,600 per 10 grams in the last two weeks, whereas silver has gained more than Rs 5,700 per kg during the same period under review.
NS Ramaswamy, Head of Commodities,
Securities, said that the US Fed has increased interest rates on the expected lines. The European Central Bank monetary policy is due this evening.
“Meanwhile, the People’s Bank of China (PBoC) added 32t of gold to its reserves in November, its first announcement since September 2019,” he said.
“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 54,800-55,00 and Rs 69,500-70,000, respectively. He also advised profit booking near support levels at Rs 54,400-54,000 and Rs 68,700-68,000, respectively.
Spot gold slipped 0.1% to $1,806.11 per ounce, as of 0035 GMT. US gold futures were little changed at $1,817.80.
Spot silver fell 0.4% to $23.81, platinum lost 0.1% to $1,027.82 and palladium was down 0.1% to $1,914.98.
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