Gold rates today fall again, down over ₹1,000 this week, silver slumps
Premium- Rising US dollar and bond yields is hurting gold prices, say analysts
Gold and silver prices remained weak in India amid a pullback in global rates. On MCX, gold futures fell 0.2% to ₹51,501 per 10 gram while silver futures slumped 1.4% to ₹55,640 per kg. The yellow metal has fallen over ₹1,000 this week amid renewed firmness in US dollar and bond yields. In global markets, gold was down 0.3% to three-week low of $1,753.84 per ounce, extending losses to the fifth straight day, weighed down by a stronger dollar and rising US bond yields.
The dollar is again on a renewed ascent while bond yields have hardened after top US Federal Reserve officials said central bank needs to keep raising interest rates to bring high inflation under control. Rising rates increase the opportunity cost of holding non-yielding bullion.
"Hints of more interest rate hikes from the recent US Fed meeting minutes and a sharp recovery in the US dollar sent gold prices to three-week low levels. In the key London spot market, prices have corrected more than 2.8 percent so far this week. Optimistic economic releases from the US took the US dollar to a near one-month high, denting the appeal of nonyielding assets like gold. However, in the domestic market, a weak rupee that pulled back from its recent highs restricted major liquidation pressure," said Hareesh V, Head of Commodities at Geojit Financial Services.
Among other precious metals, spot silver fell 1.5% to $19.23 per ounce. Commodity traders will be focused on next week's Jackson Hole, Wyoming, symposium of central bankers, where finance chiefs and central bankers will speak.
The two-month global equity markets rally from June lows appears to have run out of steam, with downward pressure coming after minutes from the Fed's most recent meeting showed policymakers are determined to keep lifting borrowing costs until prices are brought under control.
Gold price outlook
“While US dollar and bond yields affect gold prices, gold is supported by increasing global growth worries, persisting price pressure and increased geopolitical tensions. Mixed economic data from major economies highlights increasing stress on the economies," Kotak Securities said in a note.
“Virus related restriction are hampering economic activity in China while Indian gold prices remain at elevated levels due to weaker rupee and higher import duty and this may impact demand. Gold has corrected after failing to build on the gains above $1800/oz level and with US dollar holding firm we may see prices remaining under pressure however we may see some pause close to $1750-1760 levels," the brokerage said. (With Agency Inputs)
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