Gold prices today fall sharply, silver rates slump ₹9001 min read . Updated: 14 Jan 2021, 09:11 AM IST
- Higher US Treasury yields and a stronger dollar put pressure on gold prices
- Gold is now down about ₹7500 from record highs
Gold prices fell sharply in Indian markets with MCX February futures slumping below the ₹49,000 level. Gold was down 0.9% or ₹450 to ₹48,860 per 10 gram while silver futures slumped 1.4% or ₹900 to ₹65,127 per kg. The precious metal is now down about ₹7500 from record highs of ₹56,200, hit in August.
In global markets, gold prices were lower today amid higher US Treasury yields and a stronger dollar. Gold was at $1,840 an ounce, down 0.3%. Bond yields and the dollar rose today after a report indicated that US President-elect Joe Biden plans a massive Covid-19 relief package of about $2 trillion.
The dollar index was 0.05% higher at 90.377 while the yield on 10-year Treasuries rose about two basis points to 1.11%.
"Strong bond yields in US has led to stronger dollar," said CapitalVia in a note. However, US fiscal stimulus could boost the metal's appeal as an inflation hedge and the spread of new Covid-19 strain may lead the investors to look at safe haven, it added.
Gold traders will be watching comments from Federal Reserve Chairman Jerome Powell who is scheduled to participate in a webinar later today. Biden is also expected to announce his plans for substantial economic aid.
US initial jobless claims data are also due today while US retail sales, industrial production, business inventories and consumer sentiment figures are due on Friday.
Earlier, the House of Representatives voted to impeach President Donald Trump for a second time.
"Weighing on gold price is general upbeat risk sentiment on vaccine progress and stimulus expectations. Also weighing on price is weaker investor interest," Kotak Securities said in a note.
Holdings of the world's largest gold-backed exchange-traded fund or gold ETF, SPDR Gold Trust, fell 0.9% to 1,171.21 tonnes on Wednesday.
"Gold may witness choppy trade reflecting movement in US dollar. However, the general bias remains on upside amid increased stimulus expectations and persisting virus risks," Kotak Securities said.
On silver, Kotak maintains a "buy on dips" view as "stimulus expectations is likely to keep price supported." (With Agency Inputs)