Yellow metal to stay under pressure amid strong dollar

Gold prices rose on Monday in international markets, helped by a slight pullback in the U.S. dollar and as investors dialled down bets of a 100 basis point interest rate hike by the Federal Reserve this month. Spot gold had advanced 0.4% to $1,713.49 per ounce after falling to its lowest in nearly a year last week. U.S. gold futures gained 0.5% to $1,711.80. Monday morning gold contracts were trading 0.51% higher on the Multi-Commodity Exchange (MCX) at Rs 50,361 for 10 grams and silver was up 0.76% at Rs 56,010.

The dollar declined 0.1% against its rivals, moving further away from a near 20-year high hit last week, and making greenback-priced bullion less expensive for buyers holding other currencies. “The market walked back the idea of a 100-bp rate hike after Friday’s University of Michigan inflation component came in softer,” said Stephen Innes, managing partner at SPI Asset Management.

“Bullion saw a fifth straight weekly loss, the longest streak of such declines in almost four years, with investors favoring the greenback as a safe haven asset as tighter monetary policy continues to weigh on non-interest-bearing precious metals. Gold has support at Rs 49,920–49,750 levels and resistance at Rs 50,460–50,640 levels. Silver has support at Rs 54,950-54,550 levels and resistance at Rs 56,080–56,510 levels,” said, Rahul Kalantri, VP Commodities, Mehta Equities.

Ravindra Rao, VP – Head Commodity Research at Kotak Securities said, The U.S. currency has come off 2002 highs as comments from Fed officials and easing of inflation expectations dialled down concerns about a bigger rate hike by Fed at the upcoming meeting. The U.S. currency has also lost momentum amid position squaring ahead of Bank of Japan and European Central Bank meetings this week. 

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