Gold has been under renewed pressure due to hardening bond yields in the US
However, rupee's weakness against US dollar has capped losses for the precious metal
Gold and silver prices edged lower in Indian markets today amid a hardening of US bond yields. On MCX, gold futures slipped 0.03% to ₹46,580 per 10 gram, extending losses to the second day, while silver fell 0.15% to ₹66,884 per kg. In the previous session, gold had dropped 0.5% but for the week posted strong gains. MCX gold has support at ₹44,940 and resistance at ₹47,380, says domestic brokerage Geojit.
In India, gold prices have rebounded from year-low levels of ₹44,000 hit earlier this month. A jump in global rates, rupee's depreciation and renewed concerns over covid cases have supported gold at lower levels. Gold had hit a record high of ₹56,200 last August.
The rupee fell over 2% last week against the US dollar, its biggest weekly fall since August 30, 2013. "The Indian rupee depreciated on Friday and started of the new fiscal year on a weak note against the dollar in seven years on the back of the central bank’s quantitative easing announcement which could lead to inflationary pressures and importer covering," Reliance Securities said in a note. Weaker rupee pushes up the landed cost of gold in India, which imports most of its gold requirement.
In global markets, the precious metal edged lower amid hardening US bond yields on inflation concerns. Spot gold was down was down 0.3% at $1,737.07 an ounce. Other precious metals were also under pressure. Silver fell 0.2% to $25.20 while platinum was flat at $1,197.
"The immediate upside turnaround point is seen at $1760, which is needed to be cleared for continuation of further rallies in the counter. Meanwhile, inability to do so expect corrective selling pressure but stiff support is placed at $1680," Geojit said.
Higher-than-expected March producer price data fueled inflation concerns in US, lifting bond yields. Higher bond yields increases the opportunity cost of holding gold, which pays no interest.
Many analysts still see the possibility of gold coming under renewed pressure over next few months. “Sudden jump in price does not necessarily suggest that downtrend is over. There is a possibility prices may go down again to $1605 level in next few months," said Debajit Saha, Lead Metals Analyst at Refinitiv, an LSEG Business.
Gold traders will be watching comments from Fed Chair Jerome Powell who takes part in a moderated Q&A session on Wednesday. The Fed also releases its Beige Book on the same day. On Tuesday, the U.S. releases inflation data Tuesday. And on Thursday, comes US data including initial jobless claims, industrial production and retail sales. (With Agency Inputs)