Gold prices hit 4-month high on weak dollar, bond yields
Premium- MCX gold has hit the higher end of the range around Rs49,000, further upside is possible only if prices hold on to these areas for few sessions
Gold prices climbed to over four-month high on Wednesday as investor stayed bullish about the yellow metal amid weakening US dollar and bond yields. Growing inflation concerns after Federal Reserve officials maintained a dovish stance over rates, also spurred investment about gold considered to be safe haven.
In international markets, spot gold hit high at $1910 per ounce on Wednesday. In India, spot prices were at ₹48960 per 10 gm.
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Rahul Gupta, head of research- currency, Emkay Global Financial Services said, “The yellow metal has continued to show strength and the safe-haven demand will remain intact in general. While, dollar is struggling to extend recovery moves. MCX gold has hit the higher end of the range around ₹49000, further upside is possible only if prices hold on to these areas for few sessions. Else a correction towards ₹48000/47500 should be seen."
The dollar index was pinned near a 4.5month low against its rivals, making gold cheaper for other currency holders. Benchmark US Treasury yields were hovering near a two-week low, reducing the opportunity cost of holding non-interest bearing gold. Gold, often used as a hedge against inflation, has benefited from recent data showing a rise in prices in the United States and the United Kingdom.
“Broader range on gold could be between $1870- 1920 and on the domestic front prices could hover in the range of ₹48,800- 49,360."
Investors now await key U.S. economic data due later this week, including gross domestic product, jobless claims and consumer spending. Meanwhile, US Senate Republicans plan to unveil a counteroffer to US President Joe Biden's $1.7 trillion infrastructure proposal on Thursday, though one of their leaders said on Tuesday the two sides remained far apart.
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