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Gold and silver rates were today weak in Indian markets amid subdued global rates. On MCX, gold futures were down 0.3% to ₹51551 while silver futures dropped 1% to ₹61,321 per kg. In Friday's session, gold had jumped 1.3% to over one-month highs of ₹51,700 per 10 gram. Silver had gained 0.8%. In global markets, gold today eased from a one-month high as red-hot US inflation data lifted Treasury yields. Spot gold was down 0.5% at $1,862.29 per ounce. Among other precious metals, spot silver today dipped 1.1% to $21.63 per ounce.
“On Friday, Gold and Silver prices gained despite higher US yields and a stronger dollar. Gold rebounded again to $1824 and breached $1850 before clocking additional gains to reach $1870, while silver also jumped after slipping to a low of $21.24 but closed nearly at day's high at $21.89. However, post the release of the US May CPI report, gold and silver bottomed at $1824 and $21.24 respectively, the lowest level in three weeks as Treasury yields moved higher," said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
“The dollar index was up by 0.80%, at 104.15, the highest level since May 17. The US 10-year yield stands at 3.15% and the 30-year at 3.22%, both at the highest since May 9. At the same time, the US equity markets were down by more than 2%."
Bullion is often seen as an inflation hedge, but the opportunity cost of holding it is higher when the Fed raises short-term interest rates, as gold yields no interest.
“From a technical perspective, if Gold holds above $1870 it would point to more gains. The next strong barrier is seen at $1890. On the contrary, a reversal from current levels, back under $1850 would put gold back under pressure. Similarly if silver holds above $22.10 then it would be continuing the bullish trend else might see $21.40 again," said Kalantri.
“Gold has support at $1851-1842, while resistance is at $1870-1881. Silver has support at $21.45-21.20, while resistance is at $21.82-22.10. In rupee terms, gold has support at ₹51,470–51,110, while resistance is at Rs52,040–52,250. Silver has support at Rs61,280-60,850, while resistance is at Rs62,180–62,510."
Indian rupee today hit a record low of ₹78.28 against the US dollar.
“COMEX gold trades modestly lower near $1865/oz after testing 5-week high earlier in the session. Gold came under pressure weighed down by strength in US dollar and higher bond yields amid increased expectations that Fed may act aggressively to get inflation under control. Inflation concerns, growth worries and geopolitical tensions has however kept a floor to gold prices," said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
"ETF inflows also showed some buying interest in the metal. Gold may remain choppy as its safe haven appeal is countered by prospect of higher interest rate. However, with Fed meeting around the corner, firmness in US dollar may keep pressure on gold prices," he added.
Asian stocks sank on Monday on worries of a further aggressive Federal Reserve policy tightening, while a COVID-19 warning from Beijing added to concerns about global growth. It's a central bank-heavy week ahead, with the Fed expected to deliver its second straight half-point rate hike to bring inflation under control.
On the other hand, analysts say, gold is supported on the potential tailwinds in the form of persisting geopolitical tensions emanating from Russia/Ukraine and US/China, struggling global equities and negative real rates.