New Delhi: Gold prices continued to fall on Wednesday as investors looked for more clues on the pace of US monetary tightening from Federal Reserve minutes and inflation data due this week.
Investors are awaiting the release of minutes from the Fed’s September meeting. Focus is also on the inflation reading due on Thursday, which could shine some light on the Fed’s rate-hike trajectory.
Gold futures on
were trading quite lower by 0.54 per cent or Rs 278 at Rs 50,818 per 10 grams. However, silver futures tumbled by 1.42 per cent or Rs 834 at Rs 57,701 per kg.
Gold is considered as a hedge against inflation and economic uncertainties, rising interest rates reduce the appeal of the asset, which pays no interest.
Deveya Gaglani, Research Analyst, Axis Securities, said that gold declined as the dollar regained its safe haven appeal before Fed minutes, which is due later in the day. It is expected that Fed’s stance will remain hawkish in upcoming policy.
“They will continue to raise the interest rates by 75 basis points to check the high inflation,” she added. “US inflation data, which will be released this week, may define the Gold trend for the month of October.”
Gold prices are expected to trade with a negative bias for the day amid strong US dollar. It is likely to break the key support, it added. “Silver prices are likely to take cues from gold prices and trade in a downward trend.”
Physical gold prices flipped to a discount in India last week as elevated local rates amid a dive in the rupee dampened festive demand, with higher prices playing spoilsport across other Asian hubs as well.
On the physical front, Standard Chartered said in a note that with festival-wedding buying starting in India, demand would continue to firm, but was not expected to be as strong as in the fourth quarter of 2021.
In the spot market, highest purity gold was sold at Rs 50,736 per 10 grams while silver was priced at Rs 57,614 per kg on Tuesday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have dropped more than Rs 1,100 per 10 grams for just four previous sessions, whereas Silver has plunged almost Rs 3,500 per kg in the last week.
Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities, said that gold has been trading range bound as traders stay on side-lines awaiting the FOMC minutes and all-important inflation data this week.
Hawkish signals from the Federal Reserve are supporting the dollar, he said. “Having said that, the focus for the day would be on the FOMC meeting minutes scheduled to be released later in the day,” he added.
Global markets
Spot gold fell 0.1 per cent to $1,662.98 per ounce, as of 0343 GMT, hovering close to a one-week low touched on Tuesday. US gold futures were down 0.9 per cent at $1,671.00.
Spot silver fell 0.7 per cent to $19.05 per ounce, platinum rose 0.1 per cent to $886.43 and palladium gained 0.3 per cent to $2,146.47.
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