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NEW DELHI: Gold prices rose on Friday as economic data from the US increased the appeal of the yellow metal. However, gains were capped by a firm dollar.
The American economy unexpectedly shrank in the first quarter of 2022, data from the Bureau of Economic Analysis showed Thursday. Meanwhile, US dollar traded at two-decade highs.
Despite today’s gains, safe-haven bullion was headed to log its biggest monthly drop since September amid bets on aggressive interest rate hikes by the Federal Reserve.
Gold futures on MCX advanced 0.51 per cent or Rs 260 to Rs 51,522 per 10 grams. However, silver futures were trading up by 0.33 per cent or Rs 260 at Rs 64,790 per kg.
Higher short-term US interest rates and bond yields increase the opportunity cost of holding zero-yield bullion. A stronger dollar makes greenback-priced gold less attractive for other currency holders.
Rahul Kalantri, VP Commodities, Mehta Equities said: Gold and silver bulls were trying to stop the recent price fall that pushed prices to nine-week lows. A strong US dollar and rising bond yields have been hammering the metals.
“The Euro currency fell to a five-year low against the US dollar as soaring energy prices crimp the Eurozone economy. The US dollar index is solidly up again today and hit another two-year high,” he added.
In the spot market, the highest purity gold was sold at Rs 51,526 per 10 grams while silver was priced at Rs 64,266 per kg on Thursday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have dropped about Rs 2,100 per 10 grams in the last nine trading sessions, whereas Silver has tumbled about Rs 5,850 per kg in the same period under review.
Gold prices are in correction mode as the US dollar index surged on the expectation of an aggressive monetary policy tightening by the US Fed in the upcoming meeting, said Ravi Singh, Vice President and Head of Research, ShareIndia
“The outcome of the meeting may decide the next trigger for gold prices. Gold has immediate support near Rs 50,800 levels,” he added.
Trading strategy
“We expect gold prices to trade sideways to down for the day with COMEX Spot gold support at $1890 and resistance at $1910 per ounce. MCX Gold June support lies at Rs. 51200 and resistance at Rs. 51900 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Global markets
Spot gold was up 0.3 per cent at $1,899.00 per ounce, as of 0247 GMT, but had lost about 2 per cent so far this month. US gold futures were up 0.6 per cent at $1,902.10.
Spot silver gained 0.1 per cent to $23.16 per ounce, platinum dipped 0.5 per cent to $915.19, and palladium rose 0.5 per cent to $2,243.74. All were set for monthly falls.