Rising US bond yields, expectations of faster economic recovery have weighed on the safe-haven demand for gold
Gold prices fell for fifth day today while silver continued its downtrend in Indian markets, tracking softer global rates. On MCX, June gold futures fell 0.3% to near one-year low of ₹44,300 while silver declined 0.8% to ₹62,617 per kg. In the previous session, gold had declined 0.5% while silver had tumbled 1.7%. In global markets, gold rates moved lower today after latest official data showed a pick-up in factory activity in China.
Spot gold was down 0.1% to $1,683.56 per ounce, also pressured by a rise US Treasury yields added further pressure. Higher returns from bonds increase the opportunity cost of holding non-yielding gold. US bond yields had risen to a 15-month month high of 1.776% on Tuesday
"International gold is trading with bearish momentum and breached the psychological levels of $1700. Support is at $1680-$1685 levels, which could be tested in the upcoming sessions. On the domestic front, MCX Gold June has been sustaining below 50-SMA. 44000 levels could provide a support to the prices," says Kshitij Purohit, Lead – International & Commodity at CapitalVia Investment Advisor.
Among other precious metals, silver was steady at $24.01, while platinum rose 0.5% to $1,160.05 and palladium was up 0.7% at $2,607.04.
Motilal Oswal Private Wealth Management remains positive on gold and in its investment strategy for FY22 has recommended that the precious metal be treated predominantly as a hedge against heightened volatility.
Meanwhile, Kotak Securities said that it does expect a sharp fall in gold rates from current levels due to the surge in coronavirus cases across many parts of the world. "We may see price remaining under pressure as US optimism lends support to US dollar and bond yields however a sharp fall is unlikely given the worsening virus situation," the brokerage said.
Gold prices in India have been on a downward trend since hitting a record high of ₹56,200 in March.
Investor interest also remains weak but some buying was seen on Monday. The holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.1% to 1,037.50 tonnes on Monday from 1,036.62 tonnes on Friday.
Gold traders will be closely focusing on the policy announcement in the US where President Joe Biden is expected to unveil his latest multi-trillion-dollar recovery plan for the world's top economy. (With Agency Inputs)