Gold and silver prices fell sharply in Indian markets Wednesday, after a global rate collapse overnight. On the MCX, gold futures were down 1.5 percent to 47,799 per ten gramme, while silver futures were down 1.6 percent to 70,345. Technically, analysts believe that MCX gold might find support between 47,700 and 47,900, while the precious metal meets resistance near 48,600. Silver is currently facing resistance near 71,300 and is finding support near 70,000.
Gold fell more than 2.5 percent overnight on global markets as the US Federal Reserve indicated it may raise interest rates sooner than expected. Fed officials’ hawkish comments boosted the dollar to a two-month high, while US 10-year Treasury yields increased, weighing on the precious metal.
However, in Asian trade today, gold rates recovered some of the previous day’s losses as investors capitalised on a strong decline. Gold futures were up 0.6 percent to $1,822.36 per ounce. Silver increased 0.5 percent to $27.09 per ounce, palladium fell 1% to $2,770.49, and platinum increased 0.5 percent to $1,127.49.
While gold is viewed as a hedge against inflation, a rate hike by the Federal Reserve could diminish bullion’s appeal. Increased interest rates raise the opportunity cost of gold holdings. Technically, gold is supported around the $1,800 level, and analysts believe that a break of this level would result in further loss.
Overnight, Fed chairman Jerome Powell stated that while any modifications to the Fed’s bond-buying programme are still some time away, conditions have improved sufficiently to begin debating whether to pause purchases. The Fed is currently purchasing $120 billion every month in order to pump liquidity into financial markets and maintain low longer-term interest rates.
Bhoi Smrutirekha Dharanidhar