Improved global risk appetite pushed equity markets higher, weighing on gold
However, subdued dollar and US bond yields limited the fall for gold
Gold and silver prices today edged lower in Indian markets amid decline in global rates. On MCX, gold futures were down 0.22% to ₹48,444 per 10 gram while silver rates fell 0.46% to ₹71,480 per kg. In the previous session, gold had edged 0.26% higher to close near 4-month high while silver had surged over 1%. Domestic prices could hover in the range of ₹48,400- 48,900, says Navneet Damani, VP – Commodities Research, Motilal Oswal Financial Services, while broader range on COMEX could be between $1865-1900.
In global markets, gold rates slipped today as improved risk appetite pushed global equity markets higher. A subdued dollar and bond yields however limited the precious metal's decline. Spot gold slid 0.3% to $1,876.24 per ounce. Among other precious metals, silver fell 0.7% at $27.60 per ounce, while platinum was steady at $1,174.
Global equity markets were buoyed after Federal Reserve officials tried to talk down inflation risks. Top officials said price gains should prove temporary even as supply shortages push prices up in coming months as the pandemic recedes and pent-up demand was unleashed. Analysts say gold faces resistance at $1,900 level.
The volatility in cryptocurrencies continued today with bitcoin falling 3% after a 16% overnight jump.
Offering some support to gold, the dollar was down at near near four-month lows against major currencies as the dollar index fell 0.10% to 89.748 while benchmark US Treasury yields fell to two-week lows. Lower bond yields reduce the opportunity cost of holding non-interest bearing gold.
Gold-backed exchange traded funds continued to attract inflows. The holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, rose 0.3% to 1046.12 tonnes on Monday from 1042.92 tonnes on Friday.
Back in India, the second issue of Sovereign Gold Bond Scheme 2021-22 is open for subscription from May 24 to 28. The RBI will issue the bonds on behalf of the Government of India. The issue price has been fixed at ₹4,842 per gram. "The high volatility in cryptocurrencies has led to investors flocking back to gold for stability. Moving forward the critical US Fed meeting next month on possible reversal of liquidity measures, the impact of the second wave, inflation level, and unemployment data in the US will guide gold prices," said Nish Bhatt, Founder & CEO, Millwood Kane International - an Investment consulting firm.