Gold prices today fall for 3rd day in a row, down ₹5,000 in 4 months
Premium- In India, gold rates had risen as much as ₹55,200 in mid-March
Gold and silver prices were subdued today ahead of Fed rate decision later today. On MCX, gold futures were down at ₹50,540 per 10 gram, extending losses to third day. Silver futures fell 0.3% to ₹54,540 per kg. In global markets, gold rates were steady today as investors remained cautious ahead of a US Federal Reserve interest rate decision that could influence the outlook for bullion. Spot gold was nearly flat at $1,716.59 per ounce.
The US central bank is widely expected to raise interest rates by another 75 basis points (bps) at the conclusion of its policy meeting today to tame inflation.
Among other precious metals, spot silver dipped 0.1% to $18.61 per ounce, platinum fell 0.3% to $870.77, and palladium firmed 0.5% to $2,019.91.
After rising to $2,000 per ounce in early March, gold rates have been under pressure amid a rally in US dollar and rate hikes by Fed. Higher interest rates and bond yields increase the opportunity cost of holding non-yielding bullion. In India markets, gold had risen as much as ₹55,200 in mid-March before succumbing to selling pressure.
“Choppy with mild negative bias expected initially. Recovery upticks are likely only a consistent trades above $1760," domestic brokerage Geojit said in a note.
On silver, Geojit said, “a direct drop below $18 would trigger further selling pressure for the day. Else, there are chances of recovery upticks."
Ahead of the US Fed announcement, benchmark U.S. 10-year Treasury yields firmed, while the dollar eased after a sharp rise on Tuesday, increasing the greenback-priced gold's appeal among buyers holding other currencies.
"Fed is expected to maintain the pace of rate hike amid increasing challenges to the economy and some signs of easing in inflation expectations. Despite the gains, gold remains challenged by continuing ETF outflows and concerns about consumer demand in India and China. Gold has managed to hold above $1700/oz level and has benefitted from weaker US dollar however a sustained rise is unlikely unless Fed indicates pause in its monetary tightening," said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
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“We have the Fed rate decision late evening today. We see the Fed hiking rates by 75bps to 2.25-2.50%. What will matter more is whether the Fed stays focused on inflation or acknowledges growth concerns. This would drive markets expectations of future hikes and also terminal rate expectations," said IFA Global in a note.
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