The US central bank’s Federal Open Market Committee is scheduled to begin its two-day meeting on interest rates on May 3 and announce its decision the next day.
However, the safe haven bullion is likely to log its biggest monthly drop since September on bets for aggressive interest rate hikes by the Federal Reserve.
Gold futures on MCX dropped 0.88 per cent or Rs 454 down at Rs 51,300 per 10 grams. However, silver futures were trading lower by 1.65 per cent or Rs 1,059 at Rs 63,290 per kg.
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Higher short-term US interest rates and bond yields tend to increase the opportunity cost of holding bullion, which yields nothing. Bullion is also seen as a safe store of value during times of economic and political crises.
Gold prices remain dicey despite printing a three-day rebound from the lowest levels since February, said Rahul Kalantri, VP Commodities, Mehta Equities. “Cautious optimism in the markets underpins the yellow metal’s recovery moves.”
However, China’s holidays and downbeat PMIs for April join worsening Covid conditions in one of the world’s largest bullion consumers to challenge the gold price, he added.
In the spot market, highest purity gold was sold at Rs 52,055 per 10 grams while silver was priced at Rs 64,774 per kg on Friday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have dropped about Rs 1,200 per 10 grams in the last three weeks, whereas silver has tumbled more than Rs 4,500 per kg in the same period under review.
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, said Ravi Singh, Vice President and Head of Research, ShareIndia.
“We expect gold prices to trade sideways to down for the day with COMEX Spot gold support at $1,870 and resistance at $1,900 per ounce. MCX Gold June support lies at Rs 51,300 and resistance at Rs 51,900 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Spot gold retreated 0.4 per cent to $1,888.56 per ounce, as of 0241 GMT. US gold futures dropped 1.3 per cent to $1,886.90.
Spot silver fell 0.6 per cent to $22.60 per ounce, platinum dipped 0.5 per cent to $926.58, and palladium slid 2.2 per cent to $2,268.48.