NEW DELHI: Gold prices jumped on Thursday as the US dollar eased, while investors shifted their focus away from the US Federal Reserve to other key central bank meetings.
The Fed said that it would end its pandemic-era bond purchases in March and paved the way for three quarter-percentage-point interest rate hikes by the end of 2022.
Gold futures on MCX rallied 0.51 per cent or Rs 244 to Rs 48,331 per 10 grams. Silver futures rose 1.98 per cent or Rs 1,195 at Rs 61,403 per kg.
Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities said that the Fed took a hawkish stance to control inflation. However, market reaction was subdued as the move was well anticipated and as Fed maintained an open ended approach amid persisting risks to the economy from virus spread, he added.
Reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of holding bullion. Fears over the Omicron coronavirus variant, meanwhile, weighed on investor sentiment towards riskier assets.
In the most awaited central bank meeting, Fed increased the taper of bond purchase and now inflation expectations for 2022 are higher than previously estimated which supported bullion prices, said Vidit Garg, Director, MyGoldKart.
“Inflation is not going to end soon and any decision from the Fed in regard to interest rate hikes is not going to have its impact in the short-term, he added. “Any dip in the gold should be seen as a buying opportunity as the market will start discounting Fed’s interest rate hike decisions.”
In the spot market, the highest purity gold was sold at Rs 48,065 per 10 grams while silver was priced at Rs 60,251 per kg on Wednesday, according to the Indian Bullion and Jewellers Association.
The spot price of gold and silver have remained flat, almost unchanged in the one weak. However, the yellow metal is showing some strength lately hovering around Rs 48,000 levels lately.
Trading strategy
“We expect gold prices to trade sideways to up for the day with COMEX Spot gold support at $1,760 and resistance at $1,800 per ounce. MCX Gold February support lies at Rs 47,800 and resistance at Rs 48,400 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Global markets
Spot gold was up 0.2 per cent at $1,780.63 per ounce by 0135 GMT. U.S. gold futures rose 0.9 per cent to $1,780.20.
Spot silver was flat at $22.05 an ounce. Platinum shed 0.1 per cent to $918.01 and palladium gained 1 per cent to $1,613.61.