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NEW DELHI: Gold held steady on Thursday as lower US Treasury yields countered a stronger dollar after minutes from the Federal Reserve’s last meeting showed that the central bank is moving towards tapering its asset purchases as soon as this year. The yellow metal traded marginally lower in the domestic market.
Fed officials last month felt substantial further progress on the US economic recovery was generally seen as not having yet been met, but agreed they should be poised to act if inflation or other risks materialised, according to June’s minutes of meeting.
Benchmark US 10-year Treasury yields dropped to their lowest since Feb. 19, reducing the opportunity cost of holding non-interest bearing gold. The dollar index traded near the highest in three months versus its rivals, making gold expensive for other currency holders.
The European Central Bank on Thursday will announce the outcome of an 18-month strategy review, redefining its inflation target and laying down what role it plans to play in the fight against climate change.
Gold demand in India has remained subdued since the reopening of the economy after a lethal second wave of coronavirus.
Gold futures on
were down 0.33 per cent or Rs 156 at Rs 47,754 per 10 grams. Silver futures shed 0.63 per cent or Rs 435 to Rs 68,930 per kg.
“COMEX gold trades marginally lower near $1797/oz after a 0.4% gain yesterday. Gold is pressurized by firmness in the US dollar as FOMC minutes added to uncertainty about Fed’s monetary tightening. Also weighing on price is continuing ETF outflows,” said Ravindra Rao,CMT, EPAT, VP- Head Commodity Research at Kotak Securities.
In the spot market, highest purity gold was sold at Rs 48,023 while silver was priced at Rs 69,428 on Wednesday, according to the Indian Bullion and Jewellers Association.
“However, supporting price is renewed virus concerns and uneven global economic recovery. Gold may remain sideways to lower as diverging monetary policy stance of Fed and other central banks may keep US dollar supported.”
Trading strategy
“We expect gold prices to trade sideways to down for the day with COMEX gold support at $1,780 and resistance at $1,820 per ounce. MCX Gold August support lies at Rs. 47,600 and resistance at Rs. 48,200 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Global markets
Spot gold was little changed at $1,803.01 per ounce, as of 0109 GMT. U.S. gold futures edged 0.1% higher to $1,804.30 per ounce.
Silver eased 0.2% to $26.07 per ounce, palladium fell 0.1% to $2,847.97, and platinum slipped 0.4% to $1,080.37.