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NEW DELHI: Gold prices dropped sharply in the domestic markets on Tuesday as the prices adjusted in line with the global markets after opening for trade following a long weekend.
A dip in the US bond yield capped the losses, although a stronger dollar and concerns over further rate hikes by the Federal Reserve kept gains in check.
Gold futures on
were trading sharply lower by 0.88 per cent or Rs 463 at Rs 52,122 per 10 grams. However, silver futures plunged 1.91 per cent or Rs 1,132 at Rs 58,144 per kg.
Ravindra Rao, CMT, EPAT, VP- Head Commodity Research, Kotak Securities said that rebound in the US dollar, continuing ETF outflows and concerns about consumer demand in India and China weighed on the yellow metal.
“The US dollar index has bounced back on safe-haven buying and positioning ahead of FOMC minutes,” he added. “Gold rallied sharply in last few days but seems to be losing momentum and we may see some correction if Fed maintains a hawkish stance.”
Gold is highly sensitive to rising US interest rates, as these increase the opportunity cost of holding non-yielding bullion. A weaker greenback makes dollar-denominated gold less expensive for other currencies.
In the spot market, the highest purity gold was sold at Rs 52,461 per 10 grams while silver was priced at Rs 58,352 per kg on Thursday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have jumped about Rs 2,000 per 10 grams in the last three weeks, whereas silver gained 3,350 per kg in the same period under review.
Gold prices declined due to a stronger dollar, said ICICIDirect. “Concerns over further rate hikes by the US Federal Reserve to cool down the inflation dented demand for precious metals.”
Global markets
Spot gold was up 0.1 per cent at $1,781.40 per ounce, as of 0241 GMT. US gold futures eased 0.1 per cent to $1,796.70.
Spot silver slipped 0.3 per cent to $20.20 per ounce, platinum fell 0.1 per cent to $932.01, and palladium was up 0.1 per cent at $2,148.76.
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