Gold prices fall for two days in a row after rising to near 4-month high

Gold prices in India were volatile this week, hitting a near four-month high and then giving up some gains. Gold futures on MCX hit the highest level since February when they touched ₹48,830 per 10 gram on Wednesday before giving up some gains towards the end of the week. Gold futures settled at ₹48439 on Friday. Silver too had a volatile week, rising to ₹74,200 per kg on Tuesday and then settling lower at ₹71,000 on Friday.

June MCX gold has major support at ₹46920 while faces immediate resistance of ₹49600, says Hareesh V, Research Head Commodities at Geojit Financial Services.

In global markets, US gold futures settled flat near $1,880 on Friday. Consistent trades above $1880 are required to extend the positive momentum. Or else, there are chances of corrective selling, but the major reversal is seen only if there is a break of $1798, he added.

The dollar index moved 0.25% higher at 90.015 on Friday, weighing on the precious metal. Dollar edged higher after stronger-than-expected U.S. manufacturing data.

Data firm IHS Markit said its flash U.S. manufacturing PMI increased to 61.5 in the first half of this month. That was the highest reading since October 2009.

Optimism around a swift US economic recovery lifted appeal for riskier assets but growing inflationary pressure limited losses for gold, says Jigar Trivedi, Research Analyst- Commodities Fundamental, Anand Rathi Shares & Stock Brokers.

Rising US inflationary risks have led to volatility in global financial markets and minutes on Wednesday from the last Federal Reserve meeting suggested some policymakers were ready to talk about reducing stimulus by tapering bond purchases.

Wednesday's Fed minutes were effectively the first introduction of official talk of tapering, says Jigar Trivedi, Research Analyst- Commodities Fundamental, Anand Rathi Shares & Stock Brokers on Gold.

Higher US Treasury yields increase the opportunity cost of holding non-interest paying gold. (With Agency Inputs)