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Gold and silver prices edged lower today, continuing their recent correction amid weak global cues. On MCX, gold rates were down 0.13% to 45,928 per 10 gram while silver rates dropped 1% to 59,427 per kg. In the previous session, gold had dropped 0.16% while silver had tumbled 1.76%.  In global markets, gold rates edged lower as a stronger US dollar dampened the appeal of safe-haven asset. Investors were also cautious ahead of US Federal Reserve meeting later this week. Spot gold dipped 0.1% to $1,752.66 per ounce.

Expect choppy movement in gold with negative bias to continue the day, says Geojit in a note. “A direct drop below $1,740 would trigger further major selling pressure," the brokerage added.  The dollar index hovered near one-month high, denting gold's appeal for holders of other currencies.

Analysts expect the Fed to announce a timeline for reducing its monthly bond purchases as its two-day meeting starts tomorrow.  The US central bank is also likely to release fresh economic projections and a new read on officials' interest rate expectations. Gold is often viewed as a hedge against the inflation and currency debasement likely from widespread stimulus. Tapering of stimulus could diminish gold's appeal.

Also, higher interest rates raise the opportunity cost of holding non-interest bearing gold.

Among other precious metals, silver fell 0.3% to $22.33 per ounce while platinum dropped  0.1% to $940.39.

“For silver, weak bias to continue initially but stiff support seen at $21.80 which may hold further major liquidation pressure," Geojit said. 

In a note, Kotak Securities said gold may remain volatile reflecting the trend in US dollar and equity markets as market players assess Fed’s monetary policy and China’s economic health. On the downside, gold could get supported by persisting virus risks, rising inflation concerns, uneven global economic recovery, geopolitical tensions and China’s regulatory crackdown measures, say analysts. Kotak expects gold rates to stabilize near $1750/ounce level. (With Agency Inputs)

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