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Gold prices showed some signs of recovery in India while retreating in the international markets, where a recovering dollar dented the sentiments. Domestic consumers are looking favourably at the yellow metal ahead of the festive season.
Rising interest rates would spark a global recession, making greenback-priced bullion more expensive for overseas buyers and diminish its appeal.
Gold futures on the
were trading 0.18 per cent or Rs 90 down to Rs 50,095 per 10 gm. However, silver futures were trading 0.44 per cent or Rs 247 lower at Rs 56,281 per kg.
Gold prices have fallen 20 per cent since scaling above the key $2,000 per ounce-level in March, as rapid and tough US monetary tightening made non-yielding gold less attractive and boosted the dollar to multi-year peaks.
Gold is seen as a hedge against inflation and economic uncertainties, rate hikes have dented the non-yielding bullion’s appeal and pushed the dollar to multi-year highs.
ICICI Direct Research said gold prices edged higher amid a drop in the dollar and US 10-year treasury yields. Bullion prices were supported by growing fears of a global recession.
“Gold prices are expected to trade with a positive bias for the day amid weakness in US dollar index,” it added. “It is likely to surpass the hurdle of Rs 49,950 to continue its upward trend towards the level of Rs 50,150 in the coming session.”
Gold premiums in top consumer China climbed last week, helped by strong demand for bullion, while prices in India traded at a discount for the first time in four weeks due to an uptick in domestic rates.
In the spot market, highest purity gold was sold at Rs 49,505 per 10 gm while silver was priced at Rs 54,524 per kg on Wednesday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have remained below Rs 50,000 per 10 gm for 10 straight sessions, whereas silver has tumbled more than Rs 2,800 per kg in less than a week.
Ravindra Rao, CMT, EPAT VP-Head Commodity Research, Kotak Securities, said the crash in the dollar and bond yields gave some respite to the gold bulls as the bullion recovered from the lows.
“Although gold prices have recovered from the lows it will be interesting to see whether the dollar continues to slide or it’s just a blip. The rally in gold will continue only if the dollar sustains lower,” he added.
Trading strategy
Gold prices are witnessing lower levels after a continuous correction, said Ravi Singh, Vice-President and Head of Research, Share India. “The upcoming festive season may increase the gold demand,” he said.
He has suggested buying gold near Rs 49,350 for a target of Rs 49,700, whereas one can short the yellow metal near Rs 49,900 with a target of Rs 49,500.
Global markets
Spot gold was down 0.2 per cent to $1,656.59 per ounce, as of 0142 GMT. In the previous session, bullion rose as much as 2 per cent. US gold futures dipped 0.2 per cent to $1,667.10.
Spot silver fell 0.4 per cent to $18.82 per ounce, platinum was down 0.6 per cent to $858.54 and palladium dropped 1 per cent to $2,134.52.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)