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Gold prices today decline, down 11,500 from record highs; silver rates fall

Gold rates today on MCX fell to  ₹44,732 per 10 gram. Kannada actress and model Shree Leela poses for photographs at a jewellery exhibition (File photo) (PTI)Premium
Gold rates today on MCX fell to 44,732 per 10 gram. Kannada actress and model Shree Leela poses for photographs at a jewellery exhibition (File photo) (PTI)

  • A jump in US bond yields, vaccine rollouts and a rally in stock markets have put pressure on gold rates this year
  • For gold traders, the focus will be the US President Joe Biden’s $1.9 trillion coronavirus relief package which now heads back to the House

Gold was under pressure in Indian markets today amid a rally in risk assets like equities. On MCX , gold futures were down 0.3% to 44,732 per 10 gram while silver rates declined 0.7% to 67,011. In the previous session, gold had jumped 1.4% while silver had surged 2.6%, tracking a jump in global rates. Gold has been on a downward path for last few weeks amid a jump in US bond yields, vaccine rollouts and a rally in equities. Gold had rallied about 25% in 2020, hitting a record high of 56,200 in August.

In global markets, gold prices today edged lower after a big jump in the previous session. Gold shed 0.2% to reach $1,712.82 an ounce as US yields recovered today, reducing the appeal of holding gold, while the dollar also bounced back. In the previous session, the previous metal rose more than 2%, staging a strong recovery from the nine-month lows.

"A sharp recovery in the US dollar and optimism over global economic sentiment continue to hit gold’s safe-haven status, and thus the investment demand of the commodity. Meanwhile, chances of physical demand recovery and US fiscal stimulus hopes likely to restrict major downside in the metal," said Hareesh V, Research Head Commodities at Geojit Financial Services.

"A direct break of the immediate support of $1660 would continue bearish momentum in the counter. Else, there are chances of recovery upticks for the day," he said.

Among other precious metals, silver today dipped 0.4% to $25.78 an ounce while palladium rose 0.2% to $2,300 and platinum fell 1% to $1,156.94.

Gold traders are focusing on the Federal Reserve's two-day policy meeting next week. The European Central Bank holds its monetary policy meeting and President Christine Lagarde is set to do a briefing on Thursday.

Also in focus will be the US President Joe Biden’s $1.9 trillion coronavirus relief package which now heads back to the House after Senate passed it on Saturday. The precious metal is considered a hedge against a potential spike in inflation from massive economic stimulus measures.

Outflows from ETFs continued continued to weigh on gold prices, say experts. Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell to the lowest since April on Tuesday.

"Gold yields no interest so it generally weakens when returns on bond increases. Its struggle to regain upward momentum has forced investors to exit the market as is evident from continuing ETF outflows. Gold however remains supported by loose monetary policy stance of major central banks as well as increased efforts to finalize US stimulus. Increasing inflation concerns is also supportive for gold which is historically considered an inflation hedge," Kotak Securities said in a note.

Meanwhile, the Paris-based Organisation for Economic Co-operation and Development or OECD on Tuesday raised its global growth forecast, saying it now expects the global economy to grow by 5.6%, an increase of 1.4 percentage points from its December forecast. The rollout of vaccines and a huge US stimulus programme have greatly improved economic prospects, the agency said. (With Agency Inputs)

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