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NEW DELHI: Gold prices continued to remain under pressure on Monday as investors braced for aggressive rate hikes by major central banks this week, especially from the US Federal Reserve, to tame high inflation.
The US Fed’s Federal Open Market Committee is expected to begin its two-day meeting on interest rates on September 20 and announce its decision the following day.
Gold futures on
were trading lower by 0.17 per cent or Rs 83 at Rs 49,297 per 10 grams. However, silver futures were flat, marginally up by 0.09 per cent or Rs 51 at Rs 56,771 per kg.
Gold is known as a safe investment amid inflation woes, but high-interest rates increase the opportunity cost of holding non-yielding bullion.
Ravindra Rao, CMT, EPAT, VP- Head Commodity Research, Kotak Securities said gold trades marginally lower as the US dollar and bond yields continue to hold on to recent gains amid positioning for Fed’s rate hike decision this week.
“Weaker investor interest and general pressure on commodities are also weighing on prices. Global growth worries and geopolitical tensions relating to Taiwan are supporting the bullion, which may remain under pressure,” he added.
Physical gold demand picked up in India as domestic prices fell ahead of key festivals, while premiums in China climbed further as its currency weakened.
In the spot market, the highest purity gold was sold at Rs 49,341 per 10 grams while silver was priced at Rs 55,144 per kg on Friday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold plunged more than 1,500 per 10 grams in the last one week, whereas silver tumbled over Rs 2,100 per kg in the last three sessions.
The US Fed is likely to raise the interest rate by 0.75 per cent at the upcoming meeting this week and this seems to be factored in the market sentiments, said Ravi Singh, Vice President and Head of Research, ShareIndia.
Any move apart from the expectation may trigger volatility in the gold prices, he added. “The US Fed’s rate hike is supporting the dollar to recover but it is facing some challenges from the monetary tightening stance of other central banks.”
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“We expect gold prices to trade sideways to down for the day with COMEX Spot gold support at $1,650 and resistance at $1,690 per ounce. MCX Gold October support lies at Rs 49,100 and resistance at Rs 49,600 per 10 grams,” said Tapan Patel, Senior Analyst (Commodities),
Securities.
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Spot gold was down 0.3 per cent at $1,669.69 per ounce, as of 0310 GMT. US gold futures fell 0.2 per cent at $1,679.70.
Spot silver lost 1 per cent to $19.36 per ounce. Platinum fell 0.6 per cent to $901.46 and palladium was down 1 per cent at $2,113.18.
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