NEW DELHI: Gold prices held steady on Friday weighed down by an uptick in the Treasury yields and prospects of US interest rate hikes, although broader weakness in the dollar kept bullion on track for its fourth weekly gain.

Data on Thursday showed US producer prices unexpectedly fell in July. It came a day after news that consumer prices (CPI) were unchanged in July due to a drop in gasoline prices.

Gold futures on

were trading higher by 0.10 per cent or Rs 51 at Rs 52,387 per 10 grams. However, silver futures jumped 0.26 per cent or Rs 152 at Rs 58,529 per kg.

Gold prices eased, weighed down by hawkish policy remarks by US Federal Reserve officials even as data pointed to signs of inflation peaking, said ICICIDirect. “Continued decline in the US dollar index restricted further downsides in bullion prices.”

Improved macroeconomic data from the US continued to pressurise precious metal prices, it added. “The number of Americans filing new claims for unemployment benefits increased to 262,000 from 248,000 in the latest update.”

Gold is highly sensitive to rising US interest rates, as these increase the opportunity cost of holding non-yielding bullion. A weaker greenback makes dollar-denominated gold less expensive for other currencies.

In the spot market, the highest purity gold was sold at Rs 52,460 per 10 grams while silver was priced at Rs 58,700 per kg on Thursday, according to the Indian Bullion and Jewellers Association.

The spot prices of gold have jumped about Rs 2,500 per 10 grams in the last three weeks, whereas silver gained has more than Rs 4,800 per kg in the same period under review.

Ravindra Rao, CMT, EPAT, VP- Head Commodity Research, Kotak Securities said that signs of improvement in the inflation situation globally have also reduced gold’s demand as an inflation hedge.

“ETF flows also show a lack of investor participation despite recent price gains,” he added. “Gold may continue to trade in as Fed’s monetary tightening debate may continue however since Fed officials are maintaining support for continuing hikes.”

Trading Strategy
“We expect gold prices to trade sideways to up for the day with COMEX Spot gold support at $1,770 and resistance at $1,805 ounce. MCX Gold October support lies at Rs 52,000 and resistance at Rs 52,700 per 10 grams,” said Tapan Patel, Senior Analyst (Commodities),


Global markets
Spot gold held its ground at $1,789.81 per ounce, as of 0319 GMT, and has gained nearly 1 per cent so far this week. US gold futures eased 0.2 per cent to $1,804.20.

Spot silver eased 0.2 per cent to $20.34 per ounce, platinum fell 0.1 per cent to $955.16, and palladium slipped 0.6 per cent to $2,262.53.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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