Gold rates today fall from 9-month highs, silver prices drop

Gold rates in India fell today after rising to near 9-month highs in the previous week. On MCX, gold futures slipped 0.3% to ₹54,121 per 10 gram while silver fell 0.4% to ₹67,781 per kg tracking softer global rates. The yellow metal had hit a 9-month high of ₹54,400 on Friday.

In global markets, gold today slipped 0.5% to $1,787.80 per ounce as the dollar index rose 0.3%. A stronger greenback makes dollar-priced bullion more expensive for overseas buyers. US inflation data and Fed policy are due this week and traders are likely to remain wary ahead of the announcements. In addition, the European Central Bank (ECB) and the Bank of England (BoE) are also set to announce their rate decisions this week.

Among other precious metals, spot silver today lost 0.8% to $23.27, platinum fell 0.5% to $1,016.88 and palladium ticked 0.6% lower to $1,938.33.

“Several important data/events are lined up this week. We are likely to see a lot of two way price action and volatility across asset classes. We have the US November CPI on Tuesday, US Fed rate decision Wednesday late evening followed by ECB and BoE rate decisions on Thursday,” IFA Global said in a note.

Jateen Trivedi, VP Research Analyst at LKP Securities, said: "Going ahead Fed's policy will be the next trigger for gold prices which can keep a range of between $1,770 -$1,825"

Most traders expect the Fed to go for a 50-basis-point rate hike. A slower rate hike could benefit gold. Lower interest rates tend to boost gold's appeal as it decreases the opportunity cost of holding the non-yielding bullion.

Although gold performed well in November gaining by 7.25%, investment demand has been disappointing amid Fed's aggressive monetary tightening stance, Kotak Securities said in a note. 

Although gold has seen a rally over the last two months, future price gains could be capped, says analysts. 

“The interest rates in the US is still not at its peak. The Fed may continue to hike rates well into 2023 as the inflation is still at 8% level, and far off the target of 2%. Other global central banks hiking rates may also restrict gold price rally. Also, in a scenario of rising dollar, it is less likely that gold would be able to make much headway to higher levels. But a moderation in central bank rate hikes could be beneficial for the yellow metal. But that be sometime from now,” Emkay said in a recent note.  (With Agency Inputs)