Fed Chair Jerome Powell vowed that he and his fellow policymakers would “keep at” their battle to beat down inflation, as the US central bank hiked interest rates by 75 basis points.
Gold futures on
were trading marginally lower by 0.11 per cent or Rs 55 at Rs 49,388 per 10 grams. However, silver futures dropped 0.31 per cent or Rs 176 to Rs 57,122 per kg.
Gold is considered an inflation hedge, rising interest rates increase the opportunity cost of holding the non-yielding asset and bolsters the dollar, in which the bullion is priced.
Gold prices have retreated from their low after Russia ordered a partial mobilization to defend its sovereignty, said Ravi Singh, Vice President and Head of Research, ShareIndia
“The US dollar index and bond yields have already risen in expectations of an aggressive move by the Fed,” he added. “If the rate hike is deferred or minor, then we may see some correction in the US dollar which will support the gold prices.”
Physical gold demand picked up in India as domestic prices fell ahead of key festivals, while premiums in China climbed further as its currency weakened.
In the spot market, the highest purity gold was sold at Rs 49,606 per 10 grams while silver was priced at Rs 56,667 per kg on Wednesday, according to the Indian Bullion and Jewelers Association.
The spot prices of gold have plunged more than Rs 1,500 per 10 grams in the last three weeks, whereas the silver has jumped about Rs 1,500 per kg during the same period under review.
Gold and silver prices capitalized on their recent gains, even as copper extended losses in international markets following an interest rate hike and hawkish message from the Fed, said Rahul Kalantri, VP Commodities, Mehta Equities.
“Fed Chair Jerome Powell said the bank needed to take much more aggressive measures to combat red-hot inflation, and was prepared to put some pressure on the economy and the job market,” he added.
Trading Strategy “We expect gold prices to trade sideways to down for the day with COMEX Spot gold support at $1,640 and resistance at $1,676 per ounce. MCX Gold October support lies at Rs 48,800 and resistance at Rs 49,500 per 10 grams,” said Tapan Patel , Senior Analyst (Commodities),
Global markets Spot gold dropped 1 per cent to $1,656.97 per ounce, as of 0114 GMT. US gold futures fell 0.5 per cent to $1,667.30.
Spot silver shed 1.7 per cent to $19.26 per ounce, platinum fell 1.1 per cent to $897.92 and palladium was down 0.8 per cent at $2,138.51.
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