The price of gold and silver in India decreased today, mirroring the dip in global prices. Silver prices on the MCX fell 0.4% to 57,059 per kg, while gold futures fell 0.25% to nearly 7-month lows of Rs. 49,321. Spot gold prices fell 1% to $1,656.97 per ounce on foreign markets due to a strong currency and high bond yields after the U.S. Federal Reserve overnight hiked interest rates by another 75 basis points and signaled future hikes. The yield on two-year U.S. Treasury notes, which closely tracks Fed rates, rose beyond 4% to reach its highest level since 2007.
As the dollar index rose to a new two-decade high, buyers holding other currencies had to pay extra for the metal with greenback pricing. Although rate increases to control inflation tend to increase the opportunity cost of owning zero-yield bullion, gold is nonetheless seen as an inflation hedge. Platinum dropped 1.1% to $897.92 and spot silver sank 1.7% to $19.26 per ounce.
The firmness of the U.S. dollar following the Fed decision has caused COMEX gold to trade slightly lower towards $1668 per ounce, according to Ravindra Rao, VP-Head Commodity Research at Kotak Securities. The U.S. central bank forecasted the likelihood of an additional 0.75% increase this year and no interest rate cuts until 2024, sending the U.S. dollar index to its highest level since 2002. In addition, purchases of safe haven assets and little change in other central banks’ stances on the monetary policy help to maintain the U.S. dollar. Gold may continue to suffer from the dollar’s enduring strength. The market reaction may ease, though, as the Fed’s action was anticipated.
Investors stayed away from getting involved despite the recent decline in gold prices. The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, saw a 0.12% decline in holdings to 952.16 tonnes on Wednesday from 953.32 tonnes on Tuesday. Support for gold is located at $1647-1640, and resistance is located at $1670-1782. Support for silver is located around $19.05 while resistance is found at $19.42 and $19.55. Support and resistance levels for gold in rupees are Rs. 49,040–48880 and Rs. 49,610–49,760, respectively Silver has support between Rs. 56,250 and Rs. 55,640 and resistance between Rs. 57,680 and Rs. 58,110, said, Rahul Kalantri, VP of Commodities at Mehta Equities Ltd.,