NEW DELHI: Gold prices were trading higher on Friday, poised for a strong weekly gain in more than two months. The higher inflation and pressure on bond yields may keep gold prices up for the medium term.

Investors await economic data that could provide clarity about the US Federal Reserve’s tapering policy, while a weaker dollar and Treasury yields supported bullion.

Gold futures on MCX jumped 0.29 per cent or Rs 138 at Rs 47,874 per 10 grams. Silver futures were marginally up by 0.05 per cent or Rs 30 at Rs 61,950 per kg.

“US inflation data released this week was mixed while Fed officials are supporting faster rate hikes. Support from virus concerns, geopolitical issues and concerns about the Chinese economy is countered by persistent strength in equities, ETF outflows and higher yields,” said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.

Gold is considered an inflationary hedge, but the metal is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion.

In the spot market, the highest purity gold was sold at Rs 48,031 per 10 grams while silver was priced at Rs 61,753 per kg on Thursday, according to the Indian Bullion and Jewellers Association.

The spot prices of gold have scaled Rs 48,000 after almost two weeks, whereas silver has gained more than Rs 1,750 in the current week.

Trading strategy
“We expect gold prices to trade sideways to up for the day with COMEX Spot gold prices support at $1,810 and resistance at $1,833 per ounce. MCX Gold February support lies at Rs 47,500 and resistance at Rs 48,000 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.

Global markets
Spot gold was flat at $1,820.08 per ounce, as of 0048 GMT. U.S. gold futures edged down 0.1 per cent at $1,819.50. The safe-haven metal climbed 1.4 per cent so far this week.

Spot silver shed 0.2 per cent to $23.03 an ounce, platinum was up 0.1 per cent to $970.77, and palladium 0.4 per cent to $1,881.12.