Gold remained weak today with the fall in MCX futures prices 50,891 per 10 grams as the precious metal declined for the fourth straight day. Silver futures remained flat 57,335 per kg. Domestic gold rates fall 1,000 in the last four days. International gold prices were steady at $1,670.20 an ounce as traders maintained a cautious stance ahead of key US inflation data due later today. Analysts say a strong reading will turn negative for gold. Spot silver fell 0.6% to $18.95 an ounce.
Although the yellow metal is considered an inflation hedge, monetary tightening by the Fed and the resulting increase in bond yields has put pressure on the precious metal as the metal pays no interest.
Sleep It declined sharply from the $2,000 level in March.
Also the focus of market participants are the new COVID restrictions in China, the world’s top gold consumer.
“Gold prices await major triggers from US CPI inflation data, to be released today as expected data is down 8.1% as compared to last month’s 8.3%. This may keep gold prices in a supportive range. This is because any lower number in inflation will lower the dollar index and help push gold prices higher. On the other hand any rise in inflation above or around 8.5% will put pressure on gold prices as the Fed’s next meeting will take place. There will be more reasons to raise pass rates and maintain a bullish tone,” said Jatin Trivedi, VP Research Analyst, LKP Securities.
Minutes of the latest meeting of Fed officials suggested they need to raise interest rates to more restrictive levels – and then keep them there for some time – with “broad-based and unacceptably high” inflation. A readout of last month’s policy meeting was shown on Wednesday, to meet its target of reducing Fed officials have raised 75 basis points in their last three meetings.
“Although boolean The FOMC looks vulnerable to further downside amid the minutes and inflation data, geopolitical tensions and concerns of a global slowdown, which could support prices at lower levels. On the price action front $1660/oz will act as a good support while resistance is pegged near $1694/oz, above which the bulls may once again gain strength to push it higher,” Kotak Securities said in a note.
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