US bond yields have marched higher on expectations that the Federal Reserve will aggressively hike interest rates as inflation accelerates at its fastest pace in 40 years.
Gold futures on MCX dropped 0.11 per cent or Rs 58 down at Rs 52,570 per 10 gram. Silver futures were also trading lower by 0.30 per cent or Rs 206 at Rs 68,200 per kg.
Gold is highly sensitive to rising short-term US interest rates and higher yields, which increases the opportunity cost of holding zero-yield bullion.
Factors like stubborn inflation, the onset of stagflation, geopolitical uncertainties, and slow growth will be supportive of gold prices and will help create a vision for any fall, said Rahul Kalantri, VP – Commodities, Mehta Equities.
In the spot market, highest purity gold was sold at Rs 52,752 per 10 gram while silver was priced at Rs 68,590 per kg on Wednesday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have dropped more than Rs 650 per 10 grams in the last three sessions, whereas silver has declined more than Rs 1,500 per kg in the same period of review.
Ravi Singh, Vice President and Head of Research, ShareIndia, said gold prices are expected to outperform even after the current war tension settles as due to the after-effects of war, higher commodities prices and soared inflation, the world would see some sort of recession zone where gold would be the preferred asset above all.
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Gold has support at $1,938-1,928, while resistance at $1,962-1,972. Silver has support at $24.90-24.68, while resistance is at $25.30-25.48, said Kalantri of Mehta Equities.
“In rupee, gold has support at Rs 52,420–52,250, while resistance is at Rs 52,950–53,110. Silver has support at Rs 68,020- 67,650 while resistance is at Rs 68,740–69,210,” he added.
Spot gold was down 0.3 per cent at $1,951.76 per ounce, as of 0300 GMT. US gold futures were down 0.1 per cent at $1,954.50.
Spot silver dipped 0.4 per cent to $25.07 per ounce, platinum was flat at $986.86, and palladium slipped 0.2 per cent to 2,446.17.