1 min read.Updated: 04 Oct 2021, 10:27 AM ISTLivemint
Gold may be supported by increasing risk aversion in global market but any major upside is unlikely as US dollar is still on firmer footing and Fed’s monetary tightening expectations persist, say analysts.
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Gold and silver rates were subdued in Indian markets today. On MCX, gold futures were up slightly at ₹46,543 per 10 gram while silver futures were flat at ₹60,530 per kg. In the previous session, gold had settled slightly lower while silver had jumped 1.5%. In global markets, gold was down slightly at $1,759 an ounce as the dollar steadied after two sessions of losses.
Gold traders will be watching US jobs data at the end of week amid fears about slowing economic growth. Expect recovery upticks if the support of $1760 holds, domestic brokerage Geojit said.
China's Evergrande crisis was back in spotlight after trading of China Evergrande Group shares was suspended in Hong Kong. Investors are watching for further news on the beleaguered property developer which faces a bond repayment.
“The dollar index slipping to 94.05 and the US 10-year yield slipping below 1.5 percent can be interpreted as indicative of return of risk-on in equity markets. But news from China can turn out to be a drag. China is trying to limit the damage to its real estate sector without bailing out Evergrande," says VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
ETFs continued to suffer outflows. SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, said its holdings slipped 0.4% to 986.54 tonnes on Friday.
Gold is traditionally seen as an inflation hedge, but reduced central bank stimulus and interest rate hikes tend to push government bond yields up. This in turn increases opportunity cost for gold that pays no interest.
Among other precious metals, silver was down 0.1% at $22.51 an ounce while platinum fell 0.1% to $971.22.
If silver is not able to move past $23.10 expect weak bias to continue in near term, added Geojit.
“Gold has bounced back sharply and has rescaled the $1750/oz level and may benefit from increasing risk aversion in global market however any major upside is unlikely as US dollar is still on firmer footing and Fed’s monetary tightening expectations persist," Kotak Securities said.
Gold rates have been volatile this year after hitting record high of ₹56,200 in August last year.
(With Agency Inputs)
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