A downturn in business activity across the eurozone deepened in September, according to a survey which showed the economy was likely entering a recession as consumers rein in spending amid the cost of living crisis.
Gold futures on
were trading flat, marginally up, by 0.06 per cent or Rs 29 at Rs 49,430 per 10 grams. However, silver futures dropped 1.07 per cent or Rs 601 at Rs 55,632 per kg.
Gold is considered an inflation hedge while rising interest rates increase the opportunity cost of holding the non-yielding asset and bolsters the dollar, in which the bullion is priced.
Pritam Patnaik, Head – Commodities, Axis Securities said gold prices have breached the key physiological level of $1650 and continue to trade below it largely because of a surging dollar index, over hawkish outlook painted by the US Fed.
“The fact that central banks globally are ready to sacrifice growth to reign in inflation has clearly paved the path for a higher interest rate regime, which doesn’t augur well for a non-interest yielding gold prices,” he added.
Gold premiums in top consumer China climbed last week, helped by strong demand for bullion, while prices in India traded at a discount for the first time in four weeks due to an uptick in domestic rates.
In the spot market, the highest purity gold was sold at Rs 49,432 per 10 grams while silver was priced at Rs 56,100 per kg on Friday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have plunged almost Rs 1,500 per 10 grams in the last two weeks, whereas silver has jumped about Rs 1,400 per kg during the same period under review.
Despite increasing signs of deterioration in the global economy that’s adding recession fears, gold has slumped in the face of the US dollar’s relentless gains, said Ravi Singh, Vice President and Head of Research, ShareIndia.
In an effort to control inflation, the central banks around the world are raising interest rates, he adds. “Gold may face fresh volatility this week over the public speaking engagements of Fed officials.”
LME Gold spot is in continuation of a downtrend. Resistance for the same is seen at $1,680, while support is seen at around $1,600. For MCX Gold Oct Future positional supports are seen at Rs 48,500 and Rs 47,300, said Vinay Rajani, Senior Research Analyst,
Spot gold was down 0.3 per cent at $1,638.59 per ounce, as of 0053 GMT, after hitting its lowest level since April 2020 earlier in the session. US gold futures fell 0.6 per cent to $1,645.8.
Spot silver fell 0.8 per cent to $18.68 per ounce, platinum rose 0.7 per cent to $860.13, and palladium gained 0.4 per cent to $2,076.10.
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