Pritam Patnaik, Head – Commodities, Axis Securities said that gold prices rallied after the Fed event, primarily due to the fact that the 50 basis point rate hike was in line with expectations.
Rate hikes tend to lift bond yields and make bullion less attractive by raising its opportunity cost. Gold is also perceived as an inflation hedge, and is now up for a third straight session in what could be its best winning streak since mid-April.
Gold futures on MCX rallied 1.31 per cent or Rs 664 up at Rs 51,274 per 10 grams. However, silver futures were trading higher by 2.82 per cent or Rs 1,753 at Rs 63,867 per kg.
Rahul Kalantri, VP Commodities, Mehta Equities, said the outcome of the US Fed meeting dragged the US dollar index below the round level, but gold and silver prices jumped after Powell said the US central bank was not actively weighing a 75-basis point increase.
In the spot market, highest purity gold was sold at Rs 51,055 per 10 grams while silver was priced at Rs 62,538 per kg on Wednesday, according to the Indian Bullion and Jewellers Association.
The spot price of gold has dropped about Rs 2,500 per 10 grams since April 18, 2022, whereas silver has tumbled almost Rs 8,800 per kg in the same period under review.
Gold was falling in anticipation of interest rate hike and yesterday marked the most aggressive Fed tightening of monetary policy at one meeting in decades, aimed at rapidly reducing the economic stimulus that has contributed to rising price pressures, said Ravi Singh, Vice President and Head of Research, ShareIndia.
“We expect gold prices to trade sideways to up for the day with COMEX Spot gold support at $1,890 and resistance at $1,910 per ounce. MCX Gold June support lies at Rs 50,600 and resistance at Rs 51,300 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Spot gold was up 1.1 per cent at $1,901.56 per ounce, as of 0330 GMT, after rising to its highest since April 29 earlier in the session. US gold futures gained 1.8 per cent to $1,902.00.
Spot silver climbed 0.9 per cent to $23.17 per ounce, platinum advanced 1 per cent to $1,001.42, and palladium gained 0.9% to $2,275.92.