A stronger US dollar has weighed on gold price today
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Gold prices edged higher in Indian markets today, tracking higher global rates. On MCX, December gold futures were up 0.38% to hover near six-month lows of ₹45,942 per 10 gram while silver rates edged up 0.18% to ₹58,490 per kg. In the previous session, gold had dipped 0.4% while silver had slumped 3.5% or ₹2,000 per kg.
In global markets, gold prices inched higher but held near a seven-week low, hurt by a strong US dollar. Spot gold was up 0.2% at $1,729.83 per ounce, recovering from a 7-week low of $1,720.49, hit on Wednesday. The dollar index dipped slightly today but held near a year's high touched on Wednesday, raising gold's cost for buyers in other currencies. The dollar index was down slightly at 94.278,
Meanwhile, benchmark US 10-year Treasury yields were a tad lower but held above 1.5%, a level not seen since late June, still posing a challenge for gold. Lower interest rates bring down the cost of holding non-interest bearing bullion.
Fears that the Fed may begin to cut back on its stimulus measures kept the dollar stronger, undermining gold's appeal to buyers holding other currencies, said Vidit Garg, director of MyGoldKart.
“Gold must break through $1756 to resume the uptrend, otherwise this uptrend will be seen as a bearish. Bearish correction if gold breaks through $1730 then during the day we could see the yellow metal drop to $1717-$1722. Technically December MCX contract has resistance around 46350, above which it could support support at 46600 while a failure to break it could force the metal to hit new monthly lows around 45500," he added.
San Francisco Federal Reserve Bank President Mary Daly on Wednesday said the U.S. central bank will be able to begin reducing asset purchases by the year-end, but believed an interest rate hike is still a "long way" away.
Gold is traditionally seen as an inflation hedge, although reduced central bank stimulus and interest rate hikes tend to push government bond yields up, in turn translating into a higher opportunity cost for gold that pays no interest.
Among other precious metals, silver rose 0.3% to $21.58 per ounce while platinum gained 0.4% to $954.08. (With Agency Inputs)