Gold prices today fall, down ₹1,200 in a week; silver rates rise
Premium- A recovery global equity market has reduced gold’s demand as an alternative asset, say analysts, as domestic rates fell today in line with global cues
Gold prices in India fell today, continuing the volatile movement in recent days. On MCX, gold edged lower to ₹47,768 per 10 gram, down about ₹1,300 from last week's high of ₹49,000. Silver futures rose 0.5% to ₹61,645 per kg. In domestic market, there was no announcement relating to gold import duty in the union budget, presented on Tuesday.
In international markets, gold edged lower as risk appetite improved following less hawkish comments from US Federal Reserve officials. However, lower US bond yields capped losses for the precious metal. Spot gold dipped 0.2% to $1,796.90 per ounce. Fed officials have sought to play down the chance of a half-point rake hike in March. St Louis Fed President James Bullard said he sees three successive hikes starting in March but pushed back at the idea of an initial half-percentage point hike.
Also supporting gold at lower levels, the dollar index eased to its lowest level in a week, making gold attractive for other currency holders. The benchmark US 10-year Treasury yields edged lower, limiting losses in non-interest bearing bullion. Among other precious metals, spot silver gained 0.3% to $22.71 an ounce while platinum rose 0.4% to $1,031.26.
Analysts say that a recovery in US and global equity market has reduced gold’s demand as an alternative asset. US equity markets ended higher for a third day on Tuesday as market fears of aggressive tightening by Fed calmed to some extent. Gold has recovered from recent lows however a sustained rise may be difficult as central banks may support reducing stimulus measures, say analysts.
Ravindra Rao, head of commodity research at Kotak Securities, said: “Gold is rangebound as support from correction in US dollar index, geopolitical tensions, mixed economic data and ETF inflows is countered by gains in equity market and persisting worried about Fed’s monetary tightening. Gold has bounced back after taking support near $1780/oz level but may struggle to build on the gains above $1800/oz as Fed’s tightening outlook may keep US dollar supported."
Gold traders will be closely watching the outcome various central bank meetings due later this week. Although gold is considered a hedge against inflation, rate hikes would raise the opportunity cost of holding non-yielding bullion. (With Agency Inputs)
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