Solid U.S. dollar, high treasury yields to up yellow metal gains

Gold prices down on Friday in global markets and looked set to fall for a third straight week, weighed down by a robust dollar and rising yields, while investors await the U.S. jobs report to evaluate its impact on monetary policy. Spot gold fell 0.4% to $1,869.26 per ounce, while U.S. gold futures down by 0.4% to $1,869.10. Bullion has decreased about 1.5% so far in this week.

At 9:30 AM, gold contracts were up 0.15% at Rs 50,975 for 10 grams on the Multi-Commodity Exchange (MCX), while silver gained 0.22% at Rs 62,471 a kilogram.

Gold and silver prices increased after U.S. Fed chair Jerome Powell guaranteed the central bank will not hike interest rate by 0.75% in the next policy meeting. Although, the Bank of England hiked the interest rate by 0.25% to a 13 year high. Macroeconomic data across major economies has started showing a clear sign of slowdown due to a hike in interest rates.

However, a solid U.S. dollar index and treasury yield put pressure on precious metals prices at higher levels. Gold has resistance at Rs 51700 and support at Rs 50800 levels. while, Silver has support at Rs 62000 and resistance at Rs 64400 levels, said Nirpendra Yadav, Senior Commodity Research Analyst at Swastika Investmart.

Trading Strategy:

Gold prices are increasing on weaker equities and geopolitical tensions, facing blows from the rate hike from Fed. On technical setup, gold is showing strength in volume terms and may be in uptrend next week. Buy zone near Rs 50700 for target of Rs 51000 levels. Sell zone below Rs 50650 for target of Rs 50350 levels.

Leave a Reply

Your email address will not be published. Required fields are marked *