NEW DELHI: Gold prices fell sharply on Wednesday, thanks to rising bond yields and a firm US dollar. Further, economic data bolstered expectations of another rate hike by the US Fed.
The dollar index was up, inching closer to the two-decade peak scaled in the previous session, making gold more expensive for overseas buyers.
The US services industry picked up again in August for the second straight month amid stronger order growth and employment.
Gold futures on
were trading lower by 0.51 per cent or Rs 256 at Rs 50,025 per 10 grams. However, silver futures dropped 0.79 per cent or Rs 419 to Rs 52,727 per kg.
Patnaik, Head – Commodities, Axis Securities said that the surging dollar index and bond yields on the back of a greater probability of Fed hiking rates by 75 basis points has seriously dented the gold prices.
“Encouraged by positive data flows emerging from the US economy, the Fed could easily execute its plans to reign in inflation,” he added. With the probability of a 75 basis point hike, it’s not surprising to see the impact on gold.”
Gold imports by India, the world’s second-biggest bullion consumer, halved in August from year-ago levels, as volatile local prices and a weak rupee prompted consumers to postpone purchases, Reuters reported citing a government source.
In the spot market, the highest purity gold was sold at Rs 50,761 per 10 grams while silver was priced at Rs 53,696 per kg on Tuesday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have plunged more than Rs 1,300 per 10 grams in the last eight sessions, whereas silver has dropped about Rs 2,200 per kg in the same period under review.
Trading Strategy
“We expect gold prices to trade sideways to down for the day with COMEX Spot gold support at $1,676 and resistance at $1,720 per ounce. MCX Gold October support lies at Rs 49,800 and resistance at Rs 50,500 per 10 grams,” said Tapan Patel, Senior Analyst (Commodities),
Securities.
Global markets
Spot gold was down 0.3 per cent at $1,696.30 per ounce, as of 0127 GMT. US gold futures were down 0.3 per cent at $1,708.30.
Spot silver fell 0.7 per cent to $17.92 per ounce, platinum was 0.7 per cent lower at $847.46 and palladium shed 1 per cent to $1,986.79.
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