Gold price was down by Rs 1,050 on Wednesday and 10 gram of the yellow metal (24-carat) is trading at Rs 51,710. Meanwhile, 10 gram of 22-carat gold is trading at Rs 47,400 after a fall of Rs 960. Silver also witnessed a decline in its price at Rs 1,700, selling at Rs 59,800 per kg.
The Federal Open Market Committee is expected to announce its decision on interest rates at 6 pm later in the day. Investors have dramatically raised their bets that the Fed will raise interest rates by 75 basis points (bps) rather than 50 bps, a swing in expectations which has fired a violent selloff across world markets.
“In our opinion it is more likely to expect the gold price to rally before the session (Fed announcement), stay stable and then over the course of the following week continue its downward trend,” said Michael Langford, director at corporate.
Increasing short-term U.S. interest rates and bond yields increase the opportunity cost of holding bullion, which yields no interest. Benchmark U.S. 10-year Treasury yields eased from a multi-year peak, supporting gold. “Over the next few weeks in our opinion the overall downward trend in the gold price will be maintained with gold breaking below $1,800/oz,” Langford added.