Gold rates drop ₹1,000 in 2 days, down near 1-month lows
Premium- Weighing on gold price are expectations of faster and aggressive rate hikes by Fed and strong US growth data
Gold prices in India today struggled near one-month lows after a sharp selloff in the previous session. On MCX, gold edged lower to ₹47,897 per 10 gram after sliding about ₹1000 in the previous session. Silver futures on MCX were up ₹62011 per kg.
In global markets, gold was flat and was set for its sharpest weekly decline since November, hurt by a stronger US dollar after Fed signalled rate hikes from March. Spot gold was flat at $1,796.41 per ounce, down about 2% so far this week. Spot silver shed 0.2% to $22.69 an ounce.
“A direct break below $1780 for gold would trigger further selloffs in the counter. Else, a choppy trading is on the cards for the day," Geojit said in a note.
“Prices may correct further lower as it placed below $23. However major support is seen at $21.40," the brokerage added.
Data released on Thursday showed the US economy in 2021 grew 6.9% at its fastest pace in nearly four decades. The dollar index has jumped to soared to highs last seen in July 2020 against other major currencies. Interest rate hikes raise the opportunity cost of holding non-interest paying gold.
“Supporting gold price today is a pause in US dollar yesterday. Gold edged up as US dollar index paused after rally to July 2020 highs. Also supporting price is increased geopolitical tensions, rising inflationary pressure and choppiness in equities. However, weighing on price are expectations of faster and aggressive rate hikes by Fed and strong US growth data. Gold has corrected after failing to sustain above $1850/oz and a drop below $1800/oz has further dented market sentiment. However, we may not see a sustained decline amid weaker risk sentiment," said Ravindra Rao, Head Commodity Research at Kotak Securities. (With Agency Inputs)
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