NEW DELHI: Gold prices hovered near the key level of $1,900 an ounce on Tuesday, supported by a weaker dollar and lower bond yields, while investors awaited US data later this week to gauge inflationary pressure. The yellow metal traded flat in the domestic markets.
Market participants’ focus this week will be on the US consumer price index report that is expected to shed more light on the Federal Reserve’s near-term policy decision. Investors view gold as a hedge against higher inflation that could follow stimulus measures.
The dollar index was flat at 90.003, well below a three-week high of 90.62, making gold less expensive for holders of other currencies. The benchmark 10-year yield was near one-week low, reducing the opportunity cost of holding non-interest bearing gold.
Back home, lifting restrictions in various states of the country augurs well for the yellow metal. Jewellers are expecting a rise in demand in the coming days, but demand in the near term remains tepid.
Gold futures on MCX shed merely 0.01 per cent or Rs 5 at Rs 49,138 per 10 grams. Silver futures fell 0.29 per cent or Rs 210 to Rs 71,607 per kg.
“COMEX gold trades marginally higher near $1900/oz after a 0.4 per cent gain yesterday. Gold has benefitted from choppy equities and a weaker US dollar amid continued debate about inflation and monetary policy,” Ravindra Rao, CMT, EPAT, VP-Head Commodity Research, Kotak Securities.
In the spot market, highest purity gold was sold at Rs 48,806 while silver was priced at Rs 70,750 on Monday, according to the Indian Bullion and Jewellers Association. The association said: “ETF outflows and weaker consumer demand in India are weighing on prices. Gold may remain choppy as volatility in the equity market and US dollar, however the general bias may be on the upside unless the US dollar recovers sharply.”
“We expect gold prices to trade sideways to up for the day with COMEX Spot gold support at $1870 per ounce and resistance at $1920 per ounce. MCX Gold August support lies at Rs. 48800 and resistance at Rs. 49500 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Spot gold was steady at $1,899.94 per ounce, as of 0053 GMT. US gold futures edged 0.2 per cent higher to $1,902.80 per ounce.
Silver rose 0.1 per cent to $27.89 per ounce, palladium gained 0.1 per cent to $2,837.76, while platinum edged 0.1 per cent higher to $1,174.02.