NEW DELHI: Gold prices inched up on Wednesday, hovering near a four-month high on a weaker dollar, while investors awaited minutes from the US Federal Reserve’s last policy meeting as inflation worries persist. However, Indian markets bucked the global trends on the back of mixed cues.
The US central bank has pledged to keep interest rates low until the economy reaches full employment and Fed officials have repeatedly maintained that they expect any rise in inflation to be short-lived. Concerns over rising inflation intensified as US consumer prices rose 4.2 per cent in April from a year earlier.
The dollar index held close to a near three-month low against its rivals, making gold less expensive for other currency holders. Benchmark US Treasury yields inched higher, increasing the opportunity cost of holding gold.
Analysts also noted that inflows into gold exchange-traded-funds (ETFs) indicated that investors are buying precious metal to hedge against inflation worries. Market watchers said that weakness in dollar is the key driver for precious metals.
Gold prices in India continued the uptrend on the back of global cues. However, shops in major states remained locked due to restrictions imposed by local government, reducing the demand for physical gold in the world’s second-largest bullion consumer.
Gold futures on MCX were marginally down by 0.02 per cent or Rs 8 at Rs 48299 per 10 grams. Silver futures were down by 0.72 per cent or Rs 535 to Rs 72,661 per kg.
“COMEX gold trades marginally lower near $1866/oz after a near flat close yesterday. Gold has corrected after testing Feb. highs yesterday as market players positioned for FOMC minutes later today which may give more clarity on Fed’s monetary policy stance,” Ravindra Rao, CMT, EPATVP-Head Commodity Research, Kotak Securities.
In the spot market, highest purity gold was sold at Rs 48,419 while silver was priced at Rs 73,168 on Tuesday, according to the Indian Bullion and Jewellers Association.
“Gold ETF investors also moved to the sidelines. However, supporting price is Middle-east tensions and mixed economic data from major economies. Gold may remain sideways to lower as Fed’s dovish stance is largely anticipated.”
“We expect gold prices to trade sideways to up for the day with COMEX gold support at $1850 and resistance at $1876/$1890 per ounce. MCX Gold June futures support lies at Rs. 48000 and resistance at Rs. 48700 per 10 gram,” Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Spot gold was up 0.1 per cent at $1,870 per ounce by 0044 GMT, after hitting its highest since Jan. 29 at $1,874.80 in the previous session. US gold futures rose 0.1 per cent to $1,869.60 per ounce,
Palladium gained 0.2 per cent to $2,907.09 per ounce, silver eased 0.2 per cent to $28.15, while platinum edged 0.2 per cent higher to $1,220.50.