New Delhi: The rates of yellow metal continued to remain weak in Indian markets, as firmer US bond yields put pressure on the precious metal. On MCX, gold futures were down 0.1% to near two-month low of ₹47,425 per 10 gram. Silver rates also struggled at ₹60,304 per kg, down 0.2% on MCX.
In global markets, spot gold struggled at $1,789.60 per ounce after two straight sessions of falls, putting it on course for a weekly drop of over 2%. Benchmark U.S. 10-year Treasury yields steadied near their strongest level since March 2021 as traders anticipated a faster-than-expected rate hike from the US Federal Reserve.
Gold is typically considered as an hedge against inflation but the but the precious metal is highly sensitive to rising US interest rates, which increases the opportunity cost of holding non-yielding bullion.
US bond yields have risen sharply this week after the Federal Reserve’s December minutes showed that a tight jobs market and unrelenting inflation could force the U.S. central bank to raise rates more aggressively this year.
Investors will now be focusing on US non-farm payrolls report due later today. Among other precious metals, spot silver fell 0.3% to $22.08 an ounce while platinum fell 0.2% to $963.
“Hawkish Fed minutes dragged gold on downside. If labour market today shows more tightness then we may see further downside on gold in days to come. Technically on intraday charts gold is in oversold zone and any bounce till $1803 in spot gold and $22.40 in spot silver can not be denied. Any move above these levels may trigger short covering which can lead to some bounce,” said Vidit Garg, director at MyGoldKart.
However, a move below $1,780 for gold and $21.90 for will bring more pain for bulls, he said, adding “we suggest traders to trade cautiously today and wait for unemployment data to come.”
Ravindra Rao, head of commodity research at Kotak Securities, said: “Comex gold trades mixed near $1790/oz after a sharp 2% decline yesterday. Gold has stalled after the sharp sell-off triggered by FOMC minutes as market focus shifts to non-farm payrolls report. Support from virus concerns and geopolitical risks is countered by Fed’s aggressive monetary tightening stance and weaker investor interest. Gold has corrected sharply from recent highs but remains within the recent range of $1780-1830. The general bias remains weak unless we see a surprise number from US jobs report.”