Gold prices today fall for second time in 3 days, down ₹7000 from record highs2 min read . Updated: 12 Jan 2021, 09:12 AM IST
- Gold and silver rates have been volatile since the start of this year
- Analysts say that gold is likely to find support at lower levels
Gold and silver prices in India continued their volatile ride of this year amid mixed global cues. On MCX, February gold futures edged 0.03% lower to ₹49,328 per 10 gram while silver futures declined 0.22% to ₹65,414 per kg. In the previous session, gold prices had risen 0.7% after a massive fall on Friday. In international markets, gold rates today edged higher but a stronger US dollar capped gains. Spot gold rose 0.2% at $1,847.96 per ounce while silver gained 0.8% to $25.11 an ounce.
Among other precious metals, platinum rose 2.3% to $1,055 while palladium climbed 0.3% to $2,378.
A rebound in the US dollar from three-year lows along with a surge in 10-year US yields has been weighing on non-interest bearing gold since the start of this year even though expectations build up for further massive US stimulus. Higher bond yields increase the opportunity cost of holding the non-interest yielding gold.
US President-elect Joe Biden, who is set to take office later this month, is set to outline proposals stimulus package on Thursday. However, many analysts expect gold to find support at lower levels as stimulus could help to pave the way for a rise in inflation, against which gold is seen as a hedge.
"Fading political risk in U.S, rising global equities and hopes that Covid-19 may under control soon as many countries have rolled out vaccination continue to hit the safe haven appeal and thus the price of gold. However, fresh fiscal stimulus measures from U.S and a multi-year weak dollar continue to offer lower level support to the metal," Geojit Financial Services said in a note.
Moreover, a correction in gold prices, could trigger demand recovery in domestic markets, the brokerage added.
"MCX gold is required to break ₹47600 to trigger major liquidation pressure. A close above ₹52,000 is a signal of fresh upturn," Geojit added.
Amid the jump in US bond yields, all eyes are now on comments from Fed Chair Jerome Powell, who takes part in a webinar on Thursday. The Fed last month signaled that signaled that it would maintain its dovish stance until “substantial further progress" toward its goals for employment and inflation.
Gold prices had surged 25% in 2020 on the back of massive stimulus, and rising safe-haven demand. In August, gold had hit a record high of ₹56,200. Meanwhile, on Monday, Congressional Democrats formally began the process of impeaching US President Donald Trump, accusing him of "incitement of insurrection" over his supporters' deadly storming of the US Capitol.
The latest sovereign gold bond issue is currently open for subscription. The issue has been priced at ₹5,104 per unit while those who invest online will get a discount of ₹50 per unit.
(With Agency Inputs)