New Delhi: Gold prices fell sharply in Indian markets on Thursday, tracking a decline in global rates. On MCX, gold futures were down 0.5% to ₹47,772 per 10 gram while silver slumped 1.4% to ₹61,370 per kg. Among other precious metals, spot silver fell 1.1% to $22.78 an ounce while platinum was up 0.9% at $980.
A jump in US bond yields following release of minutes from the last Federal Reserve has put pressure on global gold rates that were down to about $1,810.56 per ounce.
According to minutes from the Fed’s December 14-15 policy meeting, Fed officials said last month that the U.S. labor market was “very tight” and it might need not just to raise interest rates sooner than expected, but also reduce asset holdings quickly.
Ravindra Rao, VP- Head Commodity Research at Kotak Securities, said: “COMEX gold has slipped as FOMC minutes showed that Fed officials are considering faster rate hikes and also reducing the balance sheet. The losses are however limited by increasing virus concerns. Gold has once again corrected after failing to sustain above $1830/oz but has so far managed to hold above $1800/oz level. With mixed factors in place, price may remain in a broad range however general bias may be on the downside as Fed’s stance may keep US dollar supported.”
Though gold is seen as a hedge against higher inflation, but bullion is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion.
Gold gave a pullback after hawkish tone was reflected from Fed and higher US bond yields. “Technically Gold is moving in range of $1790 – 1830 and it needs a trigger to break this range. As of now it’s trading near 9-day EMA of $1808 below which it can touch $1,803 and $1,798 while RSI and ADX are suggesting a very range bound movement, ” says Vidit Garg, director at MyGoldKart.
In global markets, gold fell nearly 4% last year, in its worst performance in six year. In India, gold also struggled in 2021 and is down about ₹9000 from its August 2020 highs of ₹56,300.