BackGold rates today fall to lowest in nearly 4 months
Despite the dip in gold prices, investor interest has been weak
PremiumGold prices continued to remain under pressure this week as as worse-than-expected US inflation increased expectations of a jumbo-sized increase in interest rates by the Fed next week. Gold is sensitive to US interest rates. Higher yields increase the opportunity cost of holding non-yielding bullion while boosting the dollar. A stronger US dollar makes gold expensive for buyers holding other currencies.
In India, gold rates today fell to lowest in nearly four months when MCX futures dropped 0.7% to ₹49679 per 10 gram while silver dipped 0.4% to ₹56765 per kg.
Ravindra Rao, VP- Head Commodity Research at Kotak Securities, said: “COMEX gold trades modestly lower amid stable US dollar and higher bond yields as US inflation data did little to deter market expectations that the Fed may continue with aggressive rate hikes. Also weighing on gold price is continuing ETF outflows which shows lack of investor interest. Gold has corrected after failing to break past the $1750/oz level and may remain under pressure as market players position for the Fed meeting next week however we need to see if it manages to hold near the $1700/oz level."
In global markets, gold fell 0.3% to below the key level of $1,700 per ounce. Spot silver dipped 0.6% to $19.57 per ounce. Investors are now fully pricing in a 75 basis point rate hike when the Federal Reserve board meets next week. Some market observers are even predicting a full percentage point increase.
Analysts also say that economic slowdown in China could also impact gold jewelry demand in the world’s biggest consumer of the precious metal.
Despite the dip in bullion prices, investor interest has been weak. The holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, fell 0.24% to 960.56 tonnes on Wednesday from 962.88 tonnes on Tuesday. \
Gold, silver technical outlook
“Choppy with mild negative bias initially expected in gold. A direct break below $1680 is a sign of major liquidation pressure," domestic brokerage Geojit said in a note.
For silver, “intraday upticks are likely as long as the support of $18.50 remains undisturbed. Further liquidation is expected only a break of $17.40," the brokerage added.
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