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NEW DELHI: Gold prices weakened further on Thursday to a two-month low, thanks to the rising dollar which hurt the bullion’s demand. An impending US interest rate hike also dampened the metal’s appeal as an inflation hedge.
The dollar index had reached a five-year top of 103.28, and a further push above 103.82 would see it to levels not visited since late-2002. A stronger dollar makes greenback-priced gold less attractive for other currency holders.
Gold futures on MCX dropped 0.39 per cent or Rs 199 to Rs 51,000 per 10 grams. Silver futures were down 0.83 per cent or Rs 540 at Rs 64,750 per kg.
Pritam Patnaik, Head – Commodities, Axis Securities said with the dollar index hitting a five-year high, it’s not surprising to see gold prices coming under pressure.
“Investors are convinced about the long-term prospects of gold, fueling the physical demand for precious metals,” he added. “The demand for gold surged by 34 per cent YoY in the first quarter of the year, led by growing ETF demand.”
In the spot market, the highest purity gold was sold at Rs 51,749 per 10 grams while silver was priced at Rs 65,277 per kg on Wednesday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have dropped more than Rs 1,850 per 10 grams in the last 10 days, whereas silver has tumbled about Rs 5,000 per kg in the same period under review.
Ravi Singh, Vice President and Head of Research, ShareIndia said that gold demand has risen, driven by investors worried about Russia’s invasion of Ukraine and rising inflation. “However, the rising yields in US dollar and treasury bonds are limiting the gains. Gold may witness some recovery in prices this week,” he added.
Trading strategy
“We expect gold prices to trade sideways to down for the day with COMEX Spot gold support at $1,870 and resistance at $1,900 per ounce. MCX Gold June support lies at Rs 50,800 and resistance at Rs 51,300 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Global markets
Spot gold was down 0.2 per cent at $1,882.49 per ounce, as of 0225 GMT, after hitting its lowest since February 24 earlier in the session. US gold futures slipped 0.4 per cent at $1,881.40.
Spot silver dipped 0.1 per cent to $23.26 per ounce, platinum eased 0.4 per cent to $914.17, while palladium gained 1.2 per cent to $2,228.75.