NEW DELHI: Gold prices retreated on Wednesday from a one-month peak scaled in the previous session, although prices flitted in a tight range as cautious investors stayed on the sidelines ahead of US inflation data due later this week.
Investors’ focus remains on the US consumer price index report due on Thursday. The data is likely to offer cues on the US Federal Reserve’s rate hike stance.
Gold futures on
were trading lower, down by 0.25% or Rs 135 at Rs 51,500 per 10 grams. Similarly, silver futures tanked 0.31% or Rs 190 at Rs 61,769 per kg.
Gold is seen as a hedge against inflation, which rising rates aim to tackle, thereby diminishing the metal’s appeal. Higher interest rates also make other assets more attractive compared to non-interest-bearing bullion.
ICICIDirect Research said gold prices edged higher on Tuesday amid a drop in US 10-year treasury yields while investors braced for the US inflation data later this week that could determine the Federal Reserve’s future policy path.
“Bullion prices were supported by a decline in the US dollar index,” it added. “Gold prices are expected to trade with a positive bias for the day amid weakness in US 10-year treasury yields.”
On the physical front, the World Gold Council said in a note dated Friday, a stable local gold price, weak RMB and economic uncertainty supported gold sales in regions such as Beijing and Shanghai in October.
In the spot market, the highest purity gold was sold at Rs 50,958 per 10 grams while silver was priced at Rs 60,245 per kg on Monday, according to Indian Bullion and Jewellers Association.
The spot prices of gold are merely shy of Rs 51,000 mark for the first time after October 10, whereas the spot prices of silver have gained more than Rs 3,600 per kg in the last two weeks.
Deveya Gaglani, Research Analyst, Axis Securities said gold looks more appealing in a scenario of a weaker dollar and lower treasury yields.
“Overall, recessionary concerns, the US midterm election result, and concerns over US economic confidence data cemented the case of a lower terminal rate hike by the Fed, which served as a key positive catalyst for gold,” she added.
Trading Strategy
Rahul Kalantri, VP-Commodities, Mehta Equities said gold has support at $1,698-1,688, while resistance is at $1,721-1,734. Silver has support at $21.10-20.82, while resistance is at $20.82-21.05.
“In rupee terms, gold has support at Rs 51,450-51,280, while resistance is at Rs 50,980, 51,140. Silver has support at Rs 61,380-60,860, while resistance is at Rs 62,450–62,810,” he added.
Global markets
Spot gold was 0.1% down at $1,711.32 per ounce, as of 0313 GMT. U.S. gold futures fell 0.1% to $1,713.80.
Spot silver was up 0.1% at $21.36. Platinum rose 0.6% to $1,003.40 and palladium was steady at $1,920.40.
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