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Gold prices in India today rebounded from one-month lows as futures on MCX rose 0.5% to 47,625 per 10 gram.  On Thursday, gold prices fell 1% or about 500, tracking a fall in global markets.  Silver futures edged higher to 61190 per kg.  In global markets, gold rates edged lower today to $1,771.04 after hitting their lowest in a month. The precious metal was on track for for its third straight weekly drop after Federal Reserve officials signaled that the US central bank could end its pandemic-era asset purchases faster than expected to combat surging inflation. Gold rates in India had hit a record high of 56,200 in August last year.

Gold has corrected sharply in last few days on Fed’s monetary tightening expectations but increased safe haven appeal has kept a floor to prices and it has so far managed to hold near $1770-1780/oz level. We expect choppy trade to continue as more details about virus emerges and authorities respond accordingly however weaker risk appetite may keep prices supported," Kotak Securities said in a note. 

Reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of non-interest bearing gold.

Despite the volatility caused by Omicron variant in financial markets, gold ETF investors stayed away. The holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell about 0.5% to 986.17 tonnes on Thursday from Wednesday. Among other precious metals, spot silver rose 0.1% to $22.40 an ounce while platinum fell 0.3% to $934.99. 

Traders are awaiting the US payrolls report later Friday, which could shape expectations for the pace of Fed policy tightening.

“Gold trades near 1-month low weighed down by increased expectations that the Fed may fasten the pace of bond tapering to curb rising inflation. ETF outflows also show weaker investor interest. However, supporting price is virus concerns which have dented growth outlook. Gold’s sharp fall indicates weaker sentiment however we may see some position squaring near key US jobs report today. US jobs report is expected to show steady growth in jobs but that is largely factored in so unless we see a much bigger than expected rise in US jobs, a fresh sell-off in gold may not be seen," said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

Vidit Garg, director at MyGoldKart, said: “Technically price is trading at deep gap from its major moving averages which indicates that prices are still in bearish zone but one bounce before next fall can not be denied and it may show upside till it's 9 period EMA which is at $1786 and above which it can try to touch $1796. Last time we saw that prices drop from 21 period EMA which is now at $1800." 

Equity markets have been choppy this week as investors try to gauge the amount of damage the omicron variant of COVID-19 might inflict on the economy, and measures the governments are taking to restrain it. 

(With Agency Inputs)

 

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