Benchmark US 10-year Treasury yields also rose, weighing on demand for zero-yield gold. Gold is seen as a safe-haven asset in times of economic crisis. Traders anticipate an aggressive Federal Reserve approach to combating inflation.
Gold futures on
were trading lower, declining 0.18 per cent or Rs 91 to Rs 51,610 per 10 grams. However, silver futures plunged 0.80 per cent or Rs 498 to Rs 61,431 per kg.
Bullion is often seen as an inflation hedge, but the opportunity cost of holding is higher when the Fed raises short-term interest rates, as gold yields no interest.
Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities said that gold came under pressure weighed down by the strength in the US dollar and higher bond yields amid increased expectations that Fed may act aggressively to get inflation under control.
“Inflation concerns, growth worries and geopolitical tensions have, however, kept a floor to gold prices,” he added. “ETF inflows also showed some buying interest in the metal. Gold may remain choppy.”
In the spot market, the highest purity gold was sold at Rs 50,935 per 10 grams while silver was priced at Rs 60,881 per kg on Friday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have dropped more than Rs 500 per 10 grams in the last one-week period, whereas silver has eased by about Rs 1,900 per kg in the same period.
“We expect gold prices to trade sideways to up for the day with COMEX Spot gold support at $1,840 and resistance at $1,890 per ounce. MCX Gold Aug support lies at Rs 51,100 and resistance at Rs 51,900 per 10 grams,” said Tapan Patel, Senior Analyst (Commodities),
Spot gold was down 0.5 per cent at $1,862.29 per ounce, as of 0205 GMT. US gold futures also eased 0.5 per cent to $1,866.80.
Spot silver dipped 1.1 per cent to $21.63 per ounce, platinum fell 1.5 per cent to $958.51, and palladium dropped 2.1 per cent to $1,894.72.
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