Gold Prices Today Fall To Near 2-month Low, Silver Rates Drop
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Gold prices fell sharply in India today, tracking weakness in global rates. On MCX, gold fell 0.7% to near two-month low of ₹51,186. At day’s low, gold fell to ₹51,086. Silver edged 0.2% lower to ₹64,821 per kg. In international markets, gold rates today fell to $1,881.45, its lowest level since February 24, before paring some losses. In latest trade, the precious metal was down 0.8% to $1,889.84 per ounce. In other metals, spot silver dipped 0.3% to $23.42 per ounce.
Analysts attribute the rally in US dollar to the recent downtrend in gold prices. The dollar rallied on expectations of an aggressive monetary policy tightening by the US Federal Reserve. The dollar index jumped to its highest level since January 2017, fuelled by expectations that the U.S. central bank will be more hawkish than peers.
Gold has support around $1880 per troy ounce and silver around $23.00, say analysts.
“There are mounting concerns regarding demand for raw commodities as Covid cases in China, are spreading rapidly throughout the country. Although the war between Russia and Ukraine and global inflation continues to worsen, but market participants are now more focused on rising yields in U.S. debt instruments such as bonds and Treasuries, reducing the luster of gold and silver,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
“In rupee terms gold has support at ₹51,140–50,920, while resistance is at ₹51,780–52,050. Silver has support at ₹64,620- 64,410 while resistance is at ₹65,690–66,070,” he added.
Concerns about slowing growth in China and Europe also boosted the safe-haven appeal of US dollar. The greenback is also seen as a rival safe-haven asset to gold during economic and political crises. The US Fed is expected to increase rates by 50 basis points at its May 3-4 policy meeting. Rising interest rates also increase the opportunity cost of holding non-yielding gold, while also boosting the dollar, in which it is priced.
“Weighing on gold price is Fed’s hawkish stance and persistent strength in the US dollar. ETF investors have also moved to sidelines. However, supporting price is increasing Russia-Ukraine tensions and global growth worries amid China’s struggle to get virus spread under control and mixed economic data from major economies. Gold has stalled near $1900/oz level after recent sell-off and while mixed factors may keep prices in a range, we expect to see some recovery amid increasing risks to global economy,” said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
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