Gold prices in India were trading near one-month low when MCX futures fell 0.2% 50,436 per 10 grams. Silver futures however rose 0.7% 55,417 per kg. In global markets, gold remained flat ahead of key US inflation readings. Spot gold was trading at $1,714.41 an ounce while silver rose 0.7% to $18.91 an ounce. Gold has gained momentum after the dollar index touched a near two-week low.
Kotak Securities VP-Head Commodity Research Ravindra Rao said gold is flat as support from a weak US dollar, China’s virus concerns and Europe’s energy crisis stem from monetary tightening from the Fed and other central banks, ETF outflows continue and there are concerns about sugar. consumer demand.
“Gold has rebounded once again after taking support near $1,700 an ounce, but may struggle with the Fed’s emphasis on aggressive stance,” he said.
US Consumer Price Index data is due tomorrow and could hint at the size of the Fed’s rate hike. Analysts expect August figures to come in at 8.1%, slower than July’s 8.5% print. Markets are broadly expecting the Fed to hike rates by 75 basis points this month. The meeting of the policy making committee of the bank will be held on September 20-21.
Higher interest rates increase the opportunity cost of holding non-yielding bullion and boost the dollar, which holds the price of gold.
“Concerns about Chinese consumer demand remain high as virus-related restrictions have hampered economic activity. Monetary tightening by major central banks is also negative for gold as it increases the opportunity cost of holding the metal. The recent correction in energy and commodity prices has somewhat eased inflation concerns, reducing the appeal of gold as an inflation hedge. Gold is seeing some buying amid a correction in the US dollar and while we may see some extended gains, the upside is still limited, given the Fed’s continued emphasis on aggressive rate hikes to control inflation, Kotak Securities said in a recent note.
Gold Technical Outlook
“Gold has support at $1716-1702, while resistance is at $1735-1744. Silver has support at $18.45-18.28, while resistance is at $18.95-19.15. Gold has support in rupee terms. 50,270–49,980, while resistance is at 50,780–50,940. support for silver 54,550-54,120, while resistance is at 55,780-56,110,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd. (with agency input)
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