NEW DELHI: Gold prices rose on Monday, supported by technical trading after the previous session’s steep fall and a pause in the dollar rally. However, an impending oversized rate hike by the US Federal Reserve limited bullion’s appeal.
A “hotter-than-expected” September inflation report doesn’t necessarily mean the US central bank needs to raise rates higher than officials projected at their most recent policy meeting.
Gold futures on
were trading with strong gains, rising 0.31 per cent or Rs 156 to Rs 50,416 per 10 grams. Similarly, silver futures were trading higher by 0.79 per cent or Rs 438 at Rs 55,664 per kg.
Gold is considered a hedge against inflation and economic uncertainties but rising interest rates reduce the appeal of the asset, which pays no interest.
“Multiyear high bond yields have smacked gold prices this year benefiting the dollar, as the opportunity cost of holding the non-yielding asset has dented its appeal,” Deveya Gaglani, Research Analyst, Axis Securities said. “The dollar index has overthrown gold and has grasped the title of Safe haven asset, questioning its historic trend.”
Physical gold buying improved in India last week as prices cooled ahead of Dhanteras and Diwali festivals later this week, while Chinese premiums stayed elevated amid robust demand.
In the spot market, the highest purity gold was sold at Rs 50,438 per 10 grams while silver was priced at Rs 56,042 per kg on Friday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have dropped almost Rs 1,300 per 10 grams in the last week, whereas silver has plunged almost Rs 4,800 per kg during the same period under review.
“Gold witnessed wild moves last week after the US CPI print that came in more than expected, supporting the Fed’s case for aggressive rate hikes,” Ravindra Rao, CMT, EPAT, VP- Head Commodity Research, Kotak Securities said. “Worsening global growth outlook might boost safe-haven buying at lower levels.”
Trading Strategy
Gold has support at $1,640-1,628, while resistance is at $1,662-1674 and silver has support at $18.10.-17.80, while resistance is at $18.72-18.95, said Rahul Kalantri, VP-Commodities, Mehta Equities.
“In rupee terms, gold has support at Rs 50,020-49,780, while resistance is at Rs 50,410, 51,580. Silver has support at Rs 54,750-54,240, while resistance is at Rs 55,880–56,450,” he added.
Global markets
Spot gold was up 0.5 per cent at $1,650.49 per ounce, as of 0149 GMT. Prices fell more than 1 per cent on Friday and marked its biggest weekly decline since July. US gold futures were up 0.4 per cent at $1,656.00.
Spot silver rose 1 per cent to $18.44 per ounce, platinum was 0.5 per cent higher at $903.63 and palladium gained 1.9 per cent to $2,025.80.
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