Investors have dramatically raised their bets that the Fed will hike interest rates by 75 basis points (bps) rather than 50 bps, a swing in expectations which has fuelled a violent selloff across world markets.
Gold futures on
were trading higher, gaining about 0.14 per cent or Rs 70 at Rs 50,265 per 10 grams. Silver futures gained close to 0.73 per cent or Rs 432 at Rs 59,933 per kg.
The dollar steadied near the previous session’s two-decade high, making greenback-priced bullion less attractive for buyers holding other currencies.
Bullion is often seen as an inflation hedge, but the opportunity cost of holding it is higher when the Fed raises short-term interest rates, as gold yields no interest.
Ravindra Rao, CMT, EPAT, VP- Head Commodity Research, Kotak Securities said gold inched up today as the US dollar index and bond yields came off recent high amid some profit-taking ahead of the Fed decision.
“The sharp selloff in gold and other commodities and rise in US dollar index in the last few days shows that market players have factored in that the Fed may take an aggressive approach to get inflation under control,” he added.
In the spot market, the highest purity gold was sold at Rs 50,647 per 10 grams while silver was priced at Rs 59,966 per kg on Monday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have dropped close to Rs 1,000 per 10 grams in the last seven trading sessions, whereas silver has plunged about Rs 2,100 per kg in the last one week.
“We expect gold prices to trade sideways to down for the day with COMEX Spot gold support at $1,800 and resistance at $1,830 per ounce. MCX Gold August futures support lies at Rs 49,800 and resistance at Rs 50,600 per 10 grams,” said Tapan Patel, Senior Analyst (Commodities),
Spot gold was up 0.5 per cent at $1,817.12 per ounce as of 0229 GMT, after dropping to its lowest since May 16 at $1,803.90 on Tuesday. US gold futures rose 0.3 per cent to $1,818.50.
Spot silver gained 0.7 per cent to $21.22 per ounce, while platinum rose 0.8 per cent to $926.89, and palladium firmed 0.5 per cent to $1,824.71.
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