NEW DELHI: Gold and silver futures edged lower on Thursday on a strong dollar after the US Fed minutes of April policy suggested that some officials were open to discussing scaling back the central bank’s massive bond purchases at some point.
Higher interest rates increase the opportunity cost of holding bullion.
Gold futures for June delivery were down 0.25 per cent at Rs 48,550 per 10 grams on MCX. Silver futures for July delivery fell 0.39 per cent to Rs 72,090 per kg.
Fed minutes published overnight suggested that a number of policymakers were of view that if the recovery in the US economy holds up, it would be appropriate to “begin discussing a plan for adjusting the pace of asset purchases”.
That said, the April meeting occurred before the release of key economic data, including an unexpected weakness in the labour market and surge in US inflation to 4.2 per cent level led by a supply-demand imbalance. The Fed has since then repeatedly offered assurances that surging prices in the near term will not translate to long-term inflation.
“I am not buying gold and silver now, as this correction may go on for a while. But gold will surely make new all-time highs. Silver is down 50 per cent, and I believe it will at least double when the bull market resumes. When people lose confidence in governments and currencies, they always go to gold and silver,” Rogers told ET NOW in an interview earlier this week.
The dollar index bounced off from a near three-month low, while benchmark US Treasury yields rose to a one-week high after the Fed minutes.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.5 per cent to 1,031.27 tonnes on Wednesday from 1,035.93 tonnes on Tuesday.
Gold prices in the international market were trading flat, hovering below the over four-month high hit in the previous session, Reuters reported. Spot gold was flat at $1,869.50 per ounce, after hitting its highest since January 8 at $1,889.75 on Wednesday. US gold futures fell 0.7 per cent to $1,869.20 per ounce.
Palladium gained 0.3 per cent to $2,875.94 per ounce, silver eased 0.3 per cent to $27.66, while platinum edged 0.2 per cent higher to $1,193.32.