Gold and silver prices in India fell today along with a fall in international prices. On MCX, gold futures were near 7-month lows of €49,321, down 0.25% while silver fell 0.4% €57,059 per kg. In global markets, spot gold fell 1% to $1,656.97 an ounce, buoyed by a strong dollar and firm bond yields after the US Federal Reserve hiked rates another 75 basis points overnight and announced more rate hikes. Two-year US Treasury yields, which closely track Fed interest rates, rose further over 4% to their highest level since 2007.
The dollar index rallied to a fresh two-decade high, making the greenback-valued metal more expensive for buyers holding other currencies.
Gold is viewed as a hedge against inflation, but raising interest rates to tame inflation tends to increase the opportunity cost of holding zero-rate bullion. Spot silver fell 1.7% to $19.26 an ounce, while platinum fell 1.1% to $897.92.
Ravindra Rao, VP-Head Commodity Research at Kotak Securities said, “COMEX gold is trading slightly lower near $1668/oz, weighed down by US dollar strength post Fed decision. The US dollar index jumped to a fresh 2002 high as the US Federal Reserve forecast the possibility of another 0.75% hike this year and no rate cut until 2024. The US dollar is also supported by safe-haven buying and no significant change in monetary policy stance from other central banks. Continued US dollar strength could continue to weigh on gold. However, the Fed’s move was well-anticipated, so the market reaction may be fading.”
Despite the recent drop in gold prices, investors refused to buy into it. Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.12% on Wednesday to 952.16 tons from 953.32 tons on Tuesday.
Gold Price – Technical Outlook
“Gold has support at $1647-1640 while resistance is at $1670-1782. Silver has support at $19.05-18.85 while resistance is at $19.42-19.55. In rupee terms, gold has support at €49,040-48880 while resistance stands at Rs49,610, 49,760. Silver has support at Rs56,250-55,640 while resistance lies at Rs57,680-58,110,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
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