Gold prices struggled near two-month lows in Indian markets amid flat global rates. On MCX, gold futures were down 0.11% to ₹47,637 per 10 gram while silver edged 0.15% lower to ₹61,018 per kg.
In global markets, gold rates were flat ahead of US inflation data due later today for rate clues. Less hawkish comments from the Federal Reserve chief on Tuesday sparked an upmove in bullion in the previous session. Spot gold today was little changed at $1,819.51 per ounce.
Fed Chairman Jerome Powell said the central bank was determined to ensure that high inflation did not become “entrenched,” and that far from diminishing job growth, a turn to higher policy interest rates and a runoff of its asset holdings was necessary to keep the current economic expansion underway.
Gold is considered a hedge against higher inflation, but the metal is highly sensitive to rising U.S. interest rates which increase the opportunity cost of holding non-yielding bullion.
“COMEX gold trades little changed near $1820/oz after a 1.1% gain yesterday. Gold edged up as US bond yields and US dollar index came under pressure following Fed Chairman’s comments which were largely in line with expectations. Fed Chairman reiterated that the central bank may end bond buying and start interest rate hike this year. However, weighing on price is recovery in equity market and weaker investor interest as is evident from ETF flows,” said said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
“Gold continues to trade in the $1780-1830/oz range amid mixed factors and this trend may continue. However, Fed’s tightening expectations may keep pressure on prices,” he added.
Among other precious metals, spot silver shed 0.1% to $22.73 an ounce, platinum fell 0.4% to $967.43, and palladium was flat at $1,920.67.
Benchmark 10-year yields dipped as more aggressive rate hikes are also seen as likely to dent growth and inflation longer-term. The yield had reached 1.808% on Monday, its highest since Jan. 21, 2020.
The dollar slid to its weakest since November against major peers, after Powell said it may take several months to make a decision on running down the central bank’s $9 trillion balance sheet. (With Agency Inputs)
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