NEW DELHI: Gold prices were trading lower on Friday ahead of the much-awaited US inﬂation numbers due later in the day, which could guide the future direction of Federal Reserve's monetary policy.
The US treasury yields rose and the dollar was on the front foot, hurting demand for zero-yield gold. US consumer price index data expected later in the day has market participants anxiously waiting for confirmation that inﬂation peaked in March.
Gold futures on MCX were trading lower, declining 0.21 per cent or Rs 105 to Rs 50,900 per 10 grams. However, silver futures plunged 0.50 per cent or Rs 301 to Rs 61,101 per kg.
Bullion is often seen as an inﬂation hedge, but the opportunity cost of holding is higher when the Fed raises short- term interest rates to combat inﬂation.
Rahul Kalantri, VP Commodities, Mehta Equities said gold and silver prices were lower, pressured by a rally in the US dollar index and the US Treasury yields that remain elevated.
"The dollar index showed strength after the ECB press conference and crossed 103.1 mark again," he added. "We expect gold and silver to remain volatile in today’s session ahead of the US inﬂation data."
In the spot market, the highest purity gold was sold at Rs 51,029 per 10 grams while silver was priced at Rs 61,806 per kg on Thursday, according to the Indian Bullion and Jewellers Association.
The spot prices of gold have remained ﬂat in the last one week period, whereas silver has eased close to Rs 1,000 per kg in the same last four sessions.
Pritam Patnaik, Head - Commodities, Axis Securities said the US inﬂation data, due today, is expected to set the tone for the US Fed’s next policy decision.
"While a 50 basis point is very much in the cards, the forward looking commentary for future action could be greatly inﬂuenced by today’s data," he added.
"We expect gold prices to trade sideways to down for the day with COMEX Spot gold support at $1,830 and resistance at $1,860 per ounce. MCX Gold support lies at Rs 50,800 and resistance at Rs 51,300 per 10 gram," said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.
Spot gold eased 0.2 per cent to $1,844.78 per ounce while US gold futures eased 0.3 per cent to $1,848.10. Gold prices have fallen about 0.3 per cent this week.
Spot silver dipped 0.1 per cent to $21.63 per ounce, and platinum fell 0.6 per cent to $966.13, while palladium rose 0.7 per cent to $1,938.01. All are on course for weekly declines.
Gold price on Friday increased by Rs 250 from the previous day's close, with 10 gram of 24-carat gold trading at Rs 52,310
Gold price on Friday increased by Rs 250 from the previous day's close, with 10 gram of 24-carat gold trading at Rs 52,310. Meanwhile, 10 gram of 22-carat gold is trading at Rs 47,950.
The precious metal is used as a hedge against inﬂation, but higher interest rates increase the opportunity cost of holding the non-yielding asset
Meanwhile, silver also opened slightly higher on Friday, trading at Rs 62,200 per kg, after an increase of Rs 100.
The price of 10 gram of 24 carat gold in Delhi, Mumbai, Bangalore, Hyderabad, and Kolkata is Rs 52,310 for the day.
The price of 10 gram of 22 carat gold in Delhi, Mumbai, Bangalore, Hyderabad, and Kolkata is Rs 47,950.
In Chennai, 10 gram of 24-carat and 22-carat gold is trading at Rs 52,430 and Rs 48,060 respectively on Wednesday.
On the other hand, silver is trading at Rs 62,200 per kg in Mumbai, Delhi and Kolkata. In Chennai, Bengalore, Hyderabad and Kerala, the precious metal is selling at Rs 68,000 per kg.
India’s gold imports in May jumped 677 per cent from a year ago to the highest level in a year as correction in prices just before a key festival and wedding season boosted retail jewellery purchases, a government source said.
Higher imports by the world's second-biggest bullion consumer could support benchmark prices, but the surge could increase India's trade deficit and put pressure on rupee.
Gold is headed for a weekly fall as Treasury yields have risen, with investors awaiting key monthly US inﬂation data that is due later in the day for cues on the future of monetary policy.
Spot gold was down 0.1% at $1,846.22 per ounce, as of 0038 GMT, while U.S. gold futures eased 0.2% to $1,849.10. Spot silver has dipped 0.1% to $21.65 per ounce.
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