NEW DELHI: Gold prices rose on Wednesday, going towards a three-week high scaled in the previous session, helped by a drop in US Treasury yields as investors awaited the minutes of the US Fed‘s June meeting for clues on policy outlook. The yellow metals posted mild gains in domestic markets.
All eyes are set on the minutes from the Fed’s latest meeting, due later in the day, expected to shed more light on interest rate trajectory after a hawkish tilt from the US central bank last month.
Benchmark 10-year Treasury yields were pinned near their lowest in more than four months. The dollar index was slightly lower at 92.515 following a 0.4 per cent gain in the previous session. Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion.
Gold demand in India has remained subdued after curbs to combat the second wave of the coronavirus were slightly relaxed. The yellow metal is being sold at a premium in the world’s largest bullion consumer market.
Gold futures on
were up 0.15 per cent or Rs 71 at Rs 47,756 per 10 grams. Silver futures were flat, down merely 0.01 per cent or Rs 7 to Rs 69,505 per kg.
“COMEX gold trades modestly higher near $1800/oz after a 0.6% gain in previous session. Gold is supported by inflation concerns, rising virus cases, mixed economic data from major economies and uncertainty caused by China’s crackdown on tech firms,” said Ravindra Rao,CMT, EPAT, VP- Head Commodity Research at Kotak Securities.
In the spot market, highest purity gold was sold at Rs 47,956 while silver was priced at Rs 69,864 on Tuesday, according to the Indian Bullion and Jewellers Association.
“However, weighing on price is weaker investor interest and Fed’s monetary tightening expectations. Gold may remain range bound ahead of FOMC minutes however the prospect of Fed’s hawkish stance may keep pressure on prices.”
Trading strategy
“We expect gold prices to trade sideways to up for the day with COMEX Spot gold support at $1780 and resistance at $1820 per ounce. MCX Gold August support lies at Rs. 47300 and resistance at Rs. 48000 per 10 gram” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Global markets
Spot gold was up 0.2% at $1,800.42 per ounce, as of 0251 GMT, after hitting its highest since June 17 at $1,814.78 on Tuesday. U.S. gold futures rose 0.4% to $1,800.50 per ounce.
Silver was steady at $26.14 per ounce, palladium fell 0.3% to $2,783.73, and platinum slipped 0.5% to $1,086.49.