NEW DELHI: Gold prices held firm near a four and a half month high on Wednesday as a drop in US Treasury yields and a weaker dollar supported the safe-haven metal. Back home, precious metals followed the global trends, gaining in early trade.
The dollar index was pinned near a 4-1/2-month low against its rivals, making gold cheaper for other currency holders. Benchmark US Treasury yields fell to a two-week low of 1.56 per cent overnight, reducing the opportunity cost of holding non-interest bearing gold.
The US Federal Reserve can curb an outbreak of inflation should it occur without throwing the recovery off track. Some investors view gold as a hedge against higher inflation that could follow stimulus measures.
Investors at home have fancied over the precious metal and gold ETFs ahead of an uncertain economic environment in the wake of a second wave of coronavirus. Analysts expect the positive trend to continue.
Gold futures on MCX were up by 0.34 per cent or Rs 166 at Rs 49,033 per 10 grams. Silver futures jumped by 0.65 per cent or Rs 471 to Rs 72,611 per kg.
“COMEX gold trades 0.4 per cent higher near $1906/oz after a 0.7 per cent gain yesterday. Gold has jumped to its Jan highs amid mixed US economic data, dovish Fed comments, weaker US dollar, choppy equities and pickup in ETF buying. However, weighing on price are concerns about Indian demand and easing geopolitical tensions,” Ravindra Rao, CMT, EPATVP-Head Commodity Research, Kotak Securities.
In the spot market, highest purity gold was sold at Rs 48,664 while silver was priced at Rs 70,814 on Tuesday, according to the Indian Bullion and Jewellers Association.
“Building on the gains noted in the last few weeks, gold has breached the key $1900/oz level indicating strong upward momentum however any stability in the equity market or US dollar may be enough to trigger a profit taking move.”
Trading strategy
“We expect gold prices to trade up for the day with COMEX gold support at $1,890 and resistance at $1,920 per ounce. MCX Gold June futures support lies at Rs. 48,300 and resistance at Rs. 49,200 per 10 gram,” Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Global markets
Spot gold was steady at $1,899.11 per ounce by 0041 GMT, after hitting its highest since Jan 8 at $1,899.11 on Tuesday. US gold futures edged 0.1 per cent higher to $1,899.60 per ounce.
Palladium rose 0.3 per cent to $2,778.97 per ounce, silver was steady at $27.99 and platinum gained 0.8 per cent to $1,200.69.