1 min read.Updated: 04 Jan 2022, 12:03 PM ISTLivemint
Rising yields, a firmer dollar and improved risk sentiment are hurting gold, despite concerns over Omicron
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Gold prices in India struggled today after a sharp fall in previous session. On MCX, gold futures were up 0.15% to ₹47,800 per 10 gram while silver rates were below ₹61,700 per kg. In the previous session, gold had dropped ₹400 per 10 gram. In global markets, gold inched up today after suffering its biggest fall in six week in the previous session. Spot gold was up 0.2% at $1,804.46 per ounce after finishing 1.5% lower in the previous session.
A spike in U.S. bond yields hit the precious metal. Benchmark US 10-year Treasury yields rose to a six-week high on Monday, spurred by bets of earlier-than-expected interest rate hikes. Higher yields raise the opportunity cost of holding non-interest paying gold.
Among other precious metals, spot silver fell 0.4% to $22.77 an ounce while platinum was up 0.1% at $956.0.
A risk-on rally in equities also pressured bullion. Rising yields, a firmer dollar and improved risk sentiment are hurting gold, despite concerns over Omicron. Despite surging coronavirus cases, the number of deaths and hospitalisations from the Omicron variant are comparatively low. A firmer US dollar makes gold more expensive for overseas buyers.
In 2021, gold marked its biggest yearly fall since 2015, ending the year down 3.6%.
Some investors view gold as a hedge against higher inflation, but bullion is highly sensitive to rising U.S. interest rates, which increase the cost of holding the commodity.
“Gold holdings with SPDR ETF were unchanged for a fourth day on Monday at 975.66 tonnes. Indian gold prices are also trading at a discount amid sluggish physical market activity owing to rising virus cases and as market players moved to sidelines awaiting more clarity on possible changes in duty structure at the upcoming Budget. Gold may continue to waver reflecting the choppiness in larger financial markets however with recovery in US dollar and higher yields, price may remain under pressure," Kotak Securities said in a note.