NEW DELHI: Gold prices were trading flat on Tuesday, following the trend in the global markets as a weaker dollar countered concerns about potential interest rate hikes.
Gold futures on MCX were flat, up by merely 0.03 per cent or Rs 12 at Rs 47,644 per 10 grams. Silver futures gained marginally by 0.05 per cent or Rs 32 at Rs 61,008 per kg.
Gold is considered a hedge against inflation; interest rate hikes would raise the opportunity cost of holding non-yielding bullion.
Ravindra Rao, CMT, EPAT, VP- Head Commodity Research, Kotak Securities said that gold has edged up amid retreat in the US dollar index from recent highs, mixed economic data and corporate earnings results, increased geopolitical tensions and inflation concerns
“ETF inflows also show buying interest. However, stability in the equity market has kept a check on the upside. Gold has edged up. However, a sharp upside is unlikely as Fed’s tightening stance may keep US dollar supported,” he added.
Top Asian hubs saw firm demand for physical gold last week in the run-up to the Lunar New Year holiday, while buyers in India held off making purchases before the government announced its annual budget.
India’s gold demand surged to 78.6 per cent in 2021 which shows a recovery in consumer sentiments and dull demand post-Covid.
In the spot market, the highest purity gold was sold at Rs 47,834 per 10 grams while silver was priced at Rs 61,074 per kg on Monday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have eased about Rs 700 per 10 grams in the last two sessions, whereas silver has dropped more than Rs 1,600 per kg during the same period.
Trading strategy
“Gold prices have bounced back from near to its support of Rs 47,400 levels. It may consolidate at current levels before gaining strength for an upward move towards the Rs 48,000 levels,” said Ravi Singh, Vice President and Head of Research, ShareIndia.
He advised to buy gold near Rs 47,700 for the target of Rs 48,000 and sell below Rs 47,500 for the target of Rs 47,400.
Global markets
Spot gold was little changed at $1,797.94 per ounce by 0140 GMT. U.S. gold futures were up 0.2 per cent at $1,799.10.
Spot silver was flat at $22.44 an ounce, platinum was up 0.1 per cent at $1,019.23 and palladium fell 1.5 per cent to $2,315.23.