A stronger US dollar and rising bond yields weighed on gold price today
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Gold prices weakened further today in Indian markets amid a slide in global rates. On MCX, gold futures were down 0.46% to near six-month low of ₹45859 per 10 gram while silver rates dropped 0.3% to ₹60,450 per kg.
In global markets, gold slipped to over one-month low as a stronger dollar and US Treasury yields dimmed the appeal for non-interest-bearing bullion. Investors were also cautious ahead of a speech by Federal Reserve chair Jerome Powell. Spot gold was down 0.5% at $1,741.90 per ounce.
US benchmark Treasury yields gained for a fourth-consecutive day to a more than three-month peak, and the dollar index rose 0.24%, making gold more expensive for holders of other currencies.
“A more hawkish Fed has resulted in a significant increase in 10-year Treasury note yields, which is likewise favourable to the US currency. The Federal Reserve will be in the spotlight again this week, with important statements by Fed officials, including the chairman, who will testify before Congress," analysts at CapitalVia said in a report.
“His testimony could provide insight into the Federal Reserve's monetary policies and current approach to the pandemic. The recent rise in 10-year Treasury note yields has resulted in the highest yields in about three months, and higher yields, along with a strong dollar, have put the brakes on any significant upward movement in gold," they added.
Support for MCX gold is seen ₹45,850 - ₹45600, while resistance seen at ₹46,370 - ₹46,700, they added.
Gold ETFs also saw suffered outflows, further weighing on bullion. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.3% to 990.32 on Monday. Congressional testimony from Fed chief Jerome Powell is due later today.
Gold is often considered a hedge against higher inflation, but a Fed rate hike would dull bullion's appeal.