New Delhi: Gold prices traded flat on Wednesday as investors held back from making big bets ahead of the US Federal Reserve’s latest policy meeting, which could offer clues on further interest rate hikes.
Fed’s minutes are due later in the evening. US durable goods data and weekly initial jobless claims are also on traders’ radar.
At the beginning of this month, the US central bank delivered a fourth consecutive 75 basis-point rate hike to tame inflation in what has become the fastest tightening of monetary policy in 40 years.
Gold futures on
were trading flat, marginally up by 0.03% or Rs 17 at Rs 52,306 per 10 grams. Silver futures jumped 0.32% or Rs 193 at Rs 61,179 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 with non-interest-bearing bullion.
Gold prices traded flat despite a drop in the US dollar index, with the focus turning to minutes from the US Federal Reserve’s latest meeting for clues on future rate hikes, said ICICIDirect Research.
Gold prices are expected to trade with a positive bias for the day amid weakness in the US dollar and a decline in US yields, it said. “Traders will remain cautious ahead of FOMC meeting minutes and major economic data to get cues,” he added.
Investors also kept a close tab on the economic fallout from fresh COVID-19 restrictions in China. Chinese physical gold premiums fell sharply last week as buying slowed.
Physical gold dealers in India were forced to offer the biggest discounts in four months last week as a jump in domestic prices hit demand, while Chinese premiums fell sharply as buying slowed.
In the spot market, the highest purity gold was sold at Rs 52,513 per 10 grams while silver was priced at Rs 61,551 per kg, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have slipped more than Rs 1,550 per 10 grams in the last two weeks, whereas spot prices of silver have jumped over Rs 1,300 per kg during the same period under review.
Deveya Gaglani, Research Analyst, Axis Securities, said that gold is trading flat as the dollar index corrected on expectations that the Federal Reserve will hike interest rates at a slower pace in the near term.
“Fed officials said in recent weeks that the central bank is likely to raise interest rates by 50 basis points in December,” she said. “Such a structure is positive for Bullions, which was hammered by aggressive rate hikes this year,” he added.
Trading Strategy
Bullions overall charts have been looking positive. Momentum Indicator RSI also indicates the same, said Amit Khare, AVP- Research Commodities, Ganganagar Commodity. He advised traders to make fresh buy positions in gold and silver.
“Bullion charts have been looking positive. Momentum indicator RSI also indicates the same,” said Amit Khare, AVP- Research Commodities, Ganganagar Commodity. He advised traders to make fresh buy positions in gold and silver.
He suggested buying gold and silver near given support levels at Rs 52,200-52,000 and Rs 60,600-60,000, respectively. He further suggested profit booking near resistance levels at Rs 52,500-52,650 and Rs 61,200 and Rs 61,800, respectively.
Global markets
Spot gold was flat at $1,740.23 per ounce by 0306 GMT. US gold futures were also unchanged at $1,740.50.
Spot silver was little changed at $21.07 per ounce, while platinum and palladium were flat at $990.70 and $1,860.89, respectively.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)