A stronger dollar and higher US Treasury yields have put pressure on gold
Gold is down close to one-year lows in Indian markets
Gold and silver pressure in India fell today, pressured by a decline in global rates. On MCX, June gold futures were down 0.4% to near one-year lows of ₹44,538 per 10 gram, extending losses to the fourth day, while silver fell 0.3% to ₹63,985 per kg. In the previous session, gold had tumbled 0.8% while silver had dropped 1% per kg.
"MCX Gold June contract began the holiday shortened week on a lower side. The weakness in the yellow metal was quite visible via trend in ETFs. The holding in the SPDR Gold ETF fell to 1,037.5 tonnes as on 29th March from 1,051.78 tonnes as on 19th March. The holding at the biggest gold-backed exchange traded fund has fallen by 150 tonnes from year high of 1,187.95 tonnes as on 4th January 2021. The US 10-year bond yield has appreciated to 1.7419%. We expect the sentiment to remain bearish," said Jigar Trivedi, Research Analyst- Commodities Fundamental, Anand Rathi Shares & Stock Brokers.
In global markets, gold edged lower, battered by a stronger US dollar and higher Treasury yields. Gold was down 0.4% to two-week lows of $1,704.90 an ounce. Optimism around a quick economic recovery as vaccinations gain momentum and concerns about a potential fallout of a hedge fund's default on margin calls lifted the greenback's safe-haven appeal.
Analysts say that gold is likely to remain choppy in line with trend in US dollar and bond yields. Higher bond yields increase the opportunity cost of holding non-yielding gold.
Also boosting the risk-appetite, Biden said 90% of U.S. adults will be eligible for Covid-19 vaccines by April 19.
In global markets, gold prices are heading for its first quarterly decline since 2018. A stronger-than-expected dollar and rising bond rates have also dragged bullion down from its record high in August last year. Expectations of a faster global recovery has also hurt the safe-haven’s appeal of bullion.
In August gold prices had hit a record high of ₹56,200 in India and so far this year the precious metal is down about ₹5,500 per 10 gram.
US bond yields rose on expectations that President Joe Biden's infrastructure package could bolster economic growth and debt issuance. Biden is expected to unveil his infrastructure program tomorrow.
Also on gold traders' watch will be OPEC+ meet later this week to discuss production levels for May. And US employment report for March is due on Friday.
Asian stock markets were mixed today US stocks finished mostly lower. One cause for market optimism was the reopening of the Suez Canal, one of the world’s most vital waterways, after a stuck cargo ship was freed.