NEW DELHI: Gold prices were trading flat on Tuesday as a weaker dollar partially offset pressure from elevated US Treasury yields, which dim the appeal of non-yielding bullion.
The focus is now on the US Federal Reserve’s meeting, which is scheduled on January 25-26 after policymakers signalled that they would start raising interest rates in March to tame inflation.
Gold futures on MCX were up by 0.01 per cent or Rs 4 at Rs 47,921 per 10 grams. Silver futures were up by 0.09 per cent or Rs 55 at Rs 61,953 per kg.
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-interest bearing bullion.
Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities said that gold remains supported by weaker US dollar, rising virus concerns, increasing inflationary pressure, geopolitical tensions relating to Russia and Middle-east, China’s monetary easing and mixed economic data from major economies.
“However, weighing on price are higher US bond yields which have jumped to a 2-year high. ETF flows also show a lack of investor participation,” he added.
Physical gold buying faltered in India last week, as prices climbed and rising coronavirus cases prompted consumers to postpone purchases, while demand in top consumer China stabilised ahead of new year festivities.
In the spot market, the highest purity gold was sold at Rs 48,142 per 10 grams while silver was priced at Rs 61,759 per kg on Monday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have remained flat for the last one week, whereas Silver has remained below Rs 62,000 for more than two weeks.
Trading strategy
“We expect gold prices to trade sideways to up for the day with COMEX Spot gold support at $1,805 and resistance at $1,833 per ounce. MCX Gold February support lies at Rs 47,600 and resistance at Rs 48,200 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Global markets
Spot gold held its ground at $1,818.87 per ounce, as of 0022 GMT. US gold futures edged up 0.1 per cent to $1,818.50.
Spot silver was up 0.1 per cent at $23.02 an ounce, platinum rose 0.3 per cent to $974.43, and palladium was flat at $1,874.66.