NEW DELHI: Gold prices firmed on Monday, after posting a 6 per cent drop last week, as a retreat in US Treasury yields boosted the allure of the non-yielding metal. However, a stronger dollar may reduce safe heaven’s appeal and make the yellow metal a lot more volatile.
The benchmark US Treasury yields fell to their lowest since March 3, reducing the opportunity cost of holding bullion, which pays no return. Gold prices traded under pressure on US Fed comments to hike interest rates by 2023.
The US dollar held near multi-month peaks against other major currencies on Monday, after the Fed surprised markets last week by signalling it would raise interest rates and end emergency bond-buying sooner than expected. The dollar index rallied sharply triggering sell off in gold prices.
Gold purchases in India ticked up last week after a decline in local rates, although dealers cautioned that demand is unlikely to return to normal levels soon.
Gold futures on MCX were down 0.38 per cent or Rs 179 at Rs 46,907 per 10 grams. Silver futures shed 0.03 per cent or Rs 19 to Rs 67,579 per kg.
“Gold prices traded steady with COMEX Spot gold prices were trading near $1775 per ounce , up by 0.65 per cent in the morning trade. The yellow metal witnessed marginal recovery after shedding 6 per cent in the previous week, reporting the worst week in the last 15 months,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
In the spot market, highest purity gold was sold at Rs 47,266 while silver was priced at Rs 68,687 on Friday, according to the Indian Bullion and Jewellers Association.
“We expect gold prices to trade sideways to down for the day with COMEX gold support at $1760 and resistance at $1800 per ounce. MCX Gold August futures support lies at Rs. 46700 and resistance at Rs. 47400 per 10 gram,” added Patel from HDFC Securities.
Spot gold was up 0.5 per cent at $1,772.34 per ounce, as of 1004 GMT. Last week, bullion prices posted their worst week since March 2020 in the US Federal Reserve’s hawkish outlook. US gold futures edged 0.2 per cent higher to $1,772 per ounce.
Silver was up 0.6 per cent at $25.95 per ounce, palladium climbed 1 per cent to $2,490.93, while platinum rose 0.4 per cent to $1,037.89.